​Export gains: On India’s trade data for June

India’s trade data for June offers insights into how the country is weathering the West Asia crisis and the prospect of a deficient monsoon. The fact that the trade deficit jumped 430% in June would seem alarming. However, a deeper look at the composition of this deficit should ease a lot of that alarm. The bulk of the increase in the deficit was due to the sharp increase in merchandise imports in June. And within this, it was led by crude, gold, fertilizers and electronic goods. The value of crude oil imports rose 40% in June 2026, reflecting the skyrocketing prices of oil a few months earlier. Gold prices have also been rising as uncertainty over the West Asia situation persists. The doubling of gold import duties in May would also have pushed up prices in June. With India’s natural gas supplies hit due to the West Asia constraints, it has had to import more fertilizer — 201% more by value over last June. The only one of these categories that has seen imports rise sharply due to domestic factors is the electronic goods segment. As India’s electronics manufacturing and assembly grow, more parts are going to come from abroad to fuel this engine. The government is encouraging this, as seen in its decision last week to remove the basic customs duty on imported parts in the manufacture of display assemblies, lithium-ion cells and inductor coil modules. These are essential if India wants to boost its manufacturing of high-end electronics such as smartphones, laptops and smart TVs. Going ahead, the attempt should also be to manufacture as many of these inputs locally so that these supply chains can be made truly secure.

The good news is that India’s merchandise exports have put on a strong showing, not only in June 2026, but throughout the first quarter of 2026-27. Merchandise exports grew 15.5% in June and by an even quicker 16% in Q1. This was not simply a buoyancy granted by costly petroleum exports, either. Non-petroleum exports grew by a robust 16.5% in June and 12.4% in Q1. This is almost precisely the duration of the West Asia crisis. The data show that India’s exports to every region of the world except West Asia grew in Q1, and that a large portion of export growth was in volume terms as well as in value. Indian exporters are to be commended for diversifying so quickly. Service exports, however, grew only 2.9% in June and 6.2% in Q1. As Chief Economic Adviser V. Anantha Nageswaran has warned, success in areas such as Global Capability Centres should not be considered an end in itself — there is still far to go, and complacency will rob India of its advantage in this area.