July goods exports up 7.2%; trade gap hits 8-month high

New Delhi: India’s goods exports rose 7.2% year-on-year in July to $37.24 billion, after declining for two consecutive months. However, a sharper rise in imports pushed the trade deficit to an eight-month high of $27.35 billion.The previous high trade deficit was recorded in November 2024, when the gap stood at $31.77 billion.

Driven by oil and gold imports, inbound shipments rose 8.6% in July to $64.59 billion from a year earlier, data released by the commerce and industry ministry showed on Thursday.

Oil imports rose to $15.5 billion in July from $13.7 billion in June, while gold imports increased to $3.9 billion from $1.8 billion the previous month. “Despite an uncertain global policy environment, India’s merchandise and services exports in July and April-July FY26 have grown substantially-higher than global growth. Exports have done very well,” said Sunil Barthwal, commerce secretary.

Key drivers of merchandise export growth included engineering goods, electronics, gems and jewellery, pharmaceuticals, and chemicals. During April-July FY26, goods exports rose 3.07% to $149.2 billion, while imports increased 5.36% to $244.01 billion.

The US and UAE were the top export destinations during this period. Among sectors, electronics saw significant growth in both exports and imports. Officials said exports to the US and China have picked up in absolute terms, with electronics exports to China increasing in the first four months of the fiscal. Additionally, rejections of Indian exports have decreased in FY25 compared to FY24, including in the month of July.Export Support Officials noted that, despite ongoing global uncertainty-including the US Section 232 investigations-India is focusing on a clear, four-pillar export strategy: improving export competitiveness, diversifying markets, reducing dependence on a few countries, and strengthening domestic resilience for exporters. The commerce and industry ministry is prioritizing 50 countries that account for over 90% of India’s exports. It has also identified 15 products for import substitution and targeted 28 new export markets. “This strategy is working, though it’s challenging due to different standards and testing requirements. We will accelerate this activity,” an official said.An Export Promotion Mission is also in the works as part of the broader export strategy. “The mission is under inter-ministerial consultation and will be announced soon,” another official said, adding that it will have two components: trade finance support and market access.

China Rare Earths Issue

India is engaging with Chinese authorities regarding restrictions on rare earth magnet exports. A senior official confirmed that Indian companies have received visas to visit China as part of ongoing efforts to ensure the supply chain remains unaffected.

In April, China imposed restrictions requiring special export licenses for seven rare earth elements and related magnets. “Efforts are ongoing. The Chinese embassy has issued visas to our companies, and they are in touch with Chinese authorities. Both sides are working to ensure the supply chain is not disrupted,” the official said.

India’s automobile industry has also urged the government to expedite approvals from Chinese authorities for importing rare earth magnets, which are essential in various applications, including passenger vehicles.