India trade deficit 2026: $28.4bn gap as gold surges

A four-year monthly high in exports, but imports climbed faster

India recorded a four-year monthly high in total estimated merchandise export value at $13.56 billion amid global trade disruptions linked to the West Asia conflict. But the import bill was materially higher at $11.94 billion, leaving an estimated merchandise trade deficit of around $18 billion for the month. A separate breakdown in the same data set puts the April goods trade deficit at $18.4 billion, widening from $10.7 billion in March.

The numbers highlight a familiar dynamic for India’s external account. Even when exports hold up, the deficit can widen quickly if big-ticket imports move against the country, especially when global prices for energy and precious metals rise.

April’s import surge was led by gold, plus broader non-oil strength

On the import side, goods imports rose 10% year-on-year to $11.9 billion. The sharpest driver was a jump in gold purchases, with gold imports rising 82% year-on-year to $1.6 billion.

Beyond gold, the data showed a 15% year-on-year increase in non-oil, non-gold imports to $17.7 billion. That matters because it suggests the widening bill was not limited to a narrow set of commodities.

A separate measure cited in the same report showed non-petroleum, non-gems and jewellery imports (gold, silver and precious metals excluded) rising to around $15 billion in April 2026 from $19 billion in April 2025.

Gold and silver: large percentage jumps from a low base

The commodity mix inside the imports basket showed an outsized rise in precious metals. Gold imports were reported up 81% from April 2025 to $1.6 billion, and silver imports rose 157% to $1.41 billion (converted from $111 million).

The narrative accompanying the numbers attributed a major part of the deficit expansion to high import prices of crude oil and gold. In addition, later annual data in the same packet linked the rise in gold imports to price appreciation rather than volume, underscoring how global price swings can distort trade outcomes even without a proportional jump in quantities.

Oil imports fell year-on-year, but the bill still rose month-on-month

Petroleum, crude, and products imports were reported down around 10% year-on-year from April 2025, with the decline linked to lower LPG imports. Yet the overall oil import bill in April was still large at $18.6 billion.

The details explain why. Oil imports fell 10% year-on-year on a high base but jumped 53% month-on-month to $18.6 billion, the highest in 12 months, as global crude prices climbed to around $105 per barrel.

This is a key point for investors tracking macro risk. Even if volumes or certain sub-categories soften, price-driven moves can quickly lift the monthly oil bill.

The deficit widened in April, with both oil and non-oil components expanding

The wider gap took India’s goods trade deficit to $18.4 billion in April, up from $10.7 billion in March. The same report noted that both the oil deficit ($1.0 billion) and the non-oil non-gold deficit ($13.7 billion) expanded sequentially.

Alongside the monthly figures, the commentary flagged the policy challenge: with oil and gold imports elevated and uncertainty persisting, the report pointed to the need for measures to restrict non-essential imports to protect the external balance.

FY26: overall deficit widened 26%, but petroleum was not the main driver

On a full-year basis, India’s overall trade deficit widened to $119.30 billion in FY26, up 26% from $14.66 billion in FY25. The same narrative argued the widening was “almost entirely” explained by two factors: a surge in gold imports driven by price appreciation rather than volume, and rising electronic component imports tied to India’s expanding manufacturing base.

The merchandise trade deficit widened 17.5% to $133.20 billion in FY26. But petroleum imports, historically the dominant import category, were reported to have fallen 6.4% to $174.0 billion, aided by discounted Russian crude through most of FY26.

Gold imports rose 24.1% to $11.98 billion, while the quantity fell from 757 tonnes to 721 tonnes. Electronic goods imports rose 17.8% to $116.2 billion, reflecting higher input demand for mobile and electronics manufacturing.

June snapshot: deficit narrowed as gold and crude imports fell

Later monthly data showed the trade picture can also improve quickly when commodity imports cool. Goods exports were reported flat at $15.1 billion in June, while imports dipped 3.71% year-on-year to $13.92 billion, narrowing the trade deficit to $18.78 billion.

The fall in imports was linked to a sharp drop in gold imports, down 26% to $1.8 billion, and a fall in crude petroleum imports to $13.7 billion in June from $14.7 billion in May. Trade secretary Sunil Barthwal was quoted saying exports and imports in June were influenced by a decline in crude oil prices.

Key figures at a glance

Market impact and external balance

The data points to three recurring pressures on India’s external balance: crude oil, gold, and electronics-related imports. The text also notes that India imports over 85% of its crude needs, which makes the import bill sensitive to currency moves and global price changes.

A separate monthly reference cited a record trade deficit of $11.68 billion in October, linked to a mix of a weakening rupee, elevated global prices for gold and crude, and dependence on imported electronic components.

Analysis: why the composition matters as much as the headline deficit

The FY26 discussion draws a distinction between oil-driven deficits and deficits shaped by gold prices and electronics inputs. Petroleum imports fell in FY26 even as the deficit widened, while gold’s import value rose despite a decline in quantity, indicating a strong price effect.

At the same time, the rise in non-oil, non-gold imports in April shows the import bill can broaden beyond energy and precious metals. For policymakers and market participants, this mix matters because it influences the kind of response under consideration, such as curbs on non-essential imports, versus measures aimed at energy sourcing and price risk management.

Conclusion

India’s monthly and annual trade numbers show a deficit widened sharply when gold and crude prices lifted the import bill, even as petroleum volumes softened. Upcoming monthly prints will be watched for whether elevated oil and gold imports persist and whether policy measures to limit non-essential imports gain traction.