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India’s merchandise trade deficit shows development, investment requirements: Jitin Prasada

29 Jul 2026 Evaluate

Amid rising merchandise trade deficit, Minister of State for Commerce and Industry Jitin Prasada has suggested that the deficit should be viewed as a by-product of India's stage of development, investment requirements and dependence on energy imports. Despite the deficit, he pointed that the overall external sector remains stable, underpinned by strong fundamentals that ensure sustainability and resilience in the face of global uncertainties. Besides, he emphasized that the deficit primarily reflects the import requirements of a rapidly expanding economy rather than structural imbalances.

A large share of India's imports is productive in nature, directly contributing to domestic manufacturing capabilities, infrastructure creation, and export competitiveness. These key imports include crude oil, capital goods, electronic goods, machinery, fertilisers, and other intermediate inputs-all essential for manufacturing, industrial expansion, infrastructure development, and energy security. Prasada noted that these imports enhance India's productive capacity and long-term growth potential, rather than being consumption-driven liabilities.

Meanwhile, India’s merchandise exports rose by 15.52% to $40.41 billion in June 2026 as compared to $34.98 billion in June 2025, driven by sustained shipments across key sectors despite broader global economic challenges. Merchandise imports grew by 31% year-on-year to $70.84 billion in June 2026, up from $54.08 billion in June 2025. Trade deficit (difference between imports and exports) widened to $30.43 billion in June 2026 as compared to $19.12 billion in the corresponding period of the previous year.

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