India’s merchandise trade deficit is likely to remain under pressure in the coming months as renewed geopolitical uncertainty in West Asia could keep oil prices and freight costs elevated. Softer crude demand from China may help limit any sharp rise in global oil prices, according to a report by Dolat Capital.“Looking ahead, renewed disruptions in the Strait of Hormuz could keep freight costs and oil prices elevated, although subdued crude demand from China and the absence of aggressive strategic reserve stockpiling by major economies are likely to limit any sharp rise in global oil prices,” the report said.India’s merchandise trade deficit widened to a five-month high of $30.4 billion in June 2026, compared with $19.1 billion a year ago, as imports grew much faster than exports. Merchandise imports rose 31 per cent y-o-y to $70.8 billion, while exports increased 15.5 per cent to $40.4 billion.According to Dolat Capital, the sharp rise in imports was driven by inventory restocking after supply chain disruptions eased following the Strait of Hormuz closure, along with strong demand for petroleum products, fertilisers, electronic goods and key agricultural commodities. Petroleum imports remained elevated at $19.3 billion, well above the pre-war monthly average of around $13-15 billion, while fertiliser imports also increased significantly. Gold imports, however, moderated to $2 billion after import duty changes that came into effect in May 2026, while silver imports declined sharply to $0.1 billion, the report noted.On the export front, engineering goods, electronic goods, petroleum products and organic and inorganic chemicals remained the key growth drivers. Export demand stayed broad-based, supported by major markets such as the United States, the UAE, Singapore and China.The report said that while India’s exports have remained resilient, stronger import growth has widened the merchandise trade deficit. It added that any further disruption to oil supplies due to geopolitical developments in West Asia could keep the country’s import bill elevated and remain a key downside risk to the current account in the months ahead.Published on July 14, 2026