India's July trade deficit widens to $27B as imports surge
What's the story
India's merchandise trade deficit widened sharply to $27.35 billion in July, from $18.78 billion in June, provisional data from the commerce ministry showed on Thursday. The widening gap comes as exports fell to $37.24 billion last month while imports rose to a whopping $64.59 billion, according to the official figures.
Market expectations
Indian exporters are grappling with new challenges
The July trade deficit was expected to be narrower at $20.35 billion, according to economists polled by Reuters. The widening gap is mainly due to the rise in imports and a decline in exports. This comes as Indian exporters are grappling with new challenges from the United States, including President Donald Trump's proposed tariffs on Indian goods.
Tariff impact
Trump's proposed tariffs on Indian goods could impact exports
The proposed 25% additional tariff on Indian goods by President Trump is scheduled to come into effect on August 27, unless a deal is struck during the ongoing 21-day negotiation window. Madan Sabnavis, Chief Economist at Bank of Baroda, said nearly half of India's exports to the US could be impacted by this move. Labor-intensive sectors such as garments and leather may bear the brunt of these tariffs.