India’s trade deficit is likely to remain under pressure in the coming months due to high crude prices, supply-side disruptions, and a possible downturn in global demand, as per the report by Nuvama Institutional Equities.
It stated that the recent increase in the import duty on bullion may be the only short-term solution to the overall deficit, even though the weakening of the rupee could help with competitiveness.
According to the report, India’s oil and gold gaps increased by about USD 2 billion each, and the country’s goods trade deficit grew to USD 28 billion in April 2026 from USD 21 billion in March. Higher shortages in chemicals, electronics, ores, and agriculture caused the core deficit—which does not include oil and gold—to worsen from USD 9 billion to USD 13 billion.
The report stated, “The electronics deficit rose by USD 0.7 billion to an all-time high of USD 7.6 billion," emphasizing it as the primary cause of the bigger deficit.
It pointed out that after declining 7.4 per cent in March; the goods exports increased 14 percent YoY in April, indicating a recovery from a weak base. Export growth increased to 1.6 per cent from -2.8 per cent on a trend basis, but the report highlighted that the underlying stimulus was still muted.
With a notable increase in electronics exports to 13 per cent YoY from 1 per cent, non-oil exports saw a small recovery to 1.4 per cent YoY from -1.5 per cent in March. On a trend basis, however, labour-intensive exports continued to decline at a rate of -9 percent. “Overall exports improved, but underlying momentum remains weak," the report noted.
Additionally, imports improved, with goods imports increasing 10 per cent YoY following a 6 per cent decrease in March. Trend import growth moderated to 9 per cent from 12 per cent, largely due to a sharp slowdown in gold imports to 63 percent from 138 per cent. Oil imports continued to contract at -15 per cent.
