India’s trade deficit pressures could persist through 2026 as electronics imports surge, export outlook stays fragile
He added that while the depreciation of the rupee may provide some support in terms of competitiveness, the recent increase in bullion import duty may provide the only near-term relief to the overall budget deficit.
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India’s goods trade deficit widened to USD 28 billion in April 2026 from USD 21 billion in March, while both oil and gold deficits increased by nearly USD 2 billion, the brokerage said. The core deficit, excluding oil and gold, decreased from $9 billion to $13 billion due to the impact of increasing deficits in the chemicals, electronics, ore and agriculture sectors.
“The electronics gap increased by US$0.7 billion to an all-time high of US$7.6 billion,” Nuvama said. he said, emphasizing that this was a key driver of wider expansion.
Exports recovered on a weak basis; Goods exports increased by 14% on an annual basis in April, following a 7.4% contraction in March. On a trend basis, export growth increased from -2.8% to 1.6%, but Nuvama noted that underlying momentum was still weak.
Also Read | The economy’s next adjustment will be at the pumpNon-oil exports showed a slight recovery, rising from -1.5% in March to 1.4% on an annual basis, due to the sharp increase in electronics exports from 1% to 13% on an annual basis. However, labor-intensive exports continued to shrink by -9% on a trend basis. “Overall, exports have increased, but underlying momentum remains weak,” the brokerage wrote.
Imports also strengthened; Imports of goods increased by 10% on an annual basis, following a 6% decrease in March. The import growth trend declined from 12% to 9%, largely due to a sharp slowdown in gold imports from 138% to 63%. Oil imports continued to shrink by -15%.
In contrast, core imports excluding oil and gold accelerated from 7% to 11%, supported by a jump in electronics imports from 18% to 29%. Machinery imports, which are seen as an indicator of investment expenditures, slowed down from 19% to 13% on a trend basis.
Nuvama warned that the export outlook remains uncertain due to ongoing supply disruptions and high crude oil prices. “Any slowdown in global demand poses additional downside risks,” he said.
The brokerage house added that the depreciation in the rupee could provide a partial compensation by increasing export competitiveness in the near and medium term. It was also noted that the recent increase in bullion import duty may help control the gold import bill and provide some relief to the overall trade deficit.
Although the headline deficit widened sharply, the composition reflected strong domestic demand for electronics as well as weak external demand for labour-intensive goods, the brokerage said.
