India's merchandise trade deficit narrows in June on lower imports
What's the story
India's merchandise trade deficit narrowed to $20.7 billion in June 2025, down from May's $21.9 billion, according to the Union Bank of India. The decline was mainly driven by falling crude oil prices and subdued gold imports. A strategic sourcing approach also contributed, especially with increased oil purchases from Russia and the US, which helped counter global commodity fluctuations.
Import strategy
Crude prices ease on temporary Israel-Iran ceasefire
The temporary Israel-Iran ceasefire and increased OPEC+ production led to a short-lived dip in crude prices, easing India's oil import bill. Even though Brent crude rose to $69.80/bbl in June from May's $64.01/bbl, the overall supply situation remained favorable, preventing a major cost surge. According to Vortexa's data, India's crude oil imports stood at 4.66 million barrels per day (mbpd) in June, slightly lower than May's 4.72 mbpd.
Sourcing shift
India diversifies oil import sources
Indian refiners increased their purchases from Russia and the US, surpassing traditional Middle Eastern suppliers. Russian oil imports hit a two-year high of 2-2.2 mbpd, while US shipments surged over 270% year-on-year (YoY) in January-April 2025. This strategic diversification minimized exposure to geopolitical hotspots like the Strait of Hormuz.
Information
Petroleum product exports decline, limiting overall improvement in deficit
Despite the positive oil import dynamics, India's petroleum product exports fell by nearly 10% in June, from 1.32 mbpd in May to 1.19 mbpd. The annual decline was at 3.7%, which limited the overall improvement in the trade deficit.
Import trends
Gold trade deficit narrows on high prices, weak demand
India's gold trade deficit narrowed in June due to high prices, stricter regulations, and weak domestic demand. Global gold prices averaged $3,353/oz, a 5% monthly and 32% year-to-date increase in USD terms. This discouraged fresh imports. Preliminary data showed a decline in May's gold imports to 30.56 tons from April's 34.87 tons, with further declines expected for June.
Policy enforcement
Coal imports rise, government enforces trade barriers
India imported 16.59 million tons (MT) of coal through major ports in June, a 1.2% YoY increase but a slight decrease of 2.1% from May. Thermal coal, which made up 70.2% of total imports, rose by 7.2% from last year, indicating strong demand from the power and industrial sectors. The government also stepped up trade enforcement with anti-dumping duties on four Chinese chemicals and import bans on jute/woven fabric from Bangladesh over violations.