Will India's Trade Deficit Stay Manageable with US Deal?
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Synopsis
India's trade deficit is projected to remain within controllable limits, with robust export growth to Asian and European markets. As seasonal gold demand rises and oil prices stabilize, the success of US-India trade negotiations will be vital for future trends. Explore the dynamics shaping India's economy and trade landscape.
Key Takeaways
- India's trade deficit is projected to remain manageable.
- Exports to Asian and European countries are showing significant growth.
- Ongoing US-India trade talks are crucial for economic stability.
- Gold imports are expected to rise due to seasonal demand.
- Lower oil prices may provide relief in import costs.
New Delhi, Oct 19 (NationPress) India’s trade deficit is expected to stay within manageable limits, bolstered by increased exports to key Asian nations like China, Hong Kong, and South Korea, which have outperformed last year's figures in both growth and overall export share, as per a recent report.
Exports to European nations, including Spain and Germany, have also demonstrated notable growth this year. This trend is encouraging and is likely to support export expansion for the remainder of the year, according to Aditi Gupta, an economist at Bank of Baroda (BoB).
When it comes to invisibles, the situation is predicted to remain relatively stable. This indicates that India’s current account deficit is projected to stay in the range of 1.2-1.5 percent of GDP for FY26. The progress of ongoing US-India trade negotiations will be an essential factor to watch in the coming times,” Gupta pointed out.
In H2, gold imports are anticipated to increase due to seasonal demand. However, potential relief may arise from decreased oil prices, which are expected to maintain current levels amid anticipated oversupply.
“Export growth remains strong, with indications of diversification towards new markets,” the BoB report states.
India’s export growth stood firm at 6.8 percent in September, contrasting with a 1 percent decline in September 2024, primarily supported by a continued surge in electronics exports.
The growth rate of imports has slowed down, attributed to reduced gold and oil imports. Nonetheless, non-oil and non-gold imports have shown positive momentum this year.
India’s merchandise exports have risen by 3 percent in FY26 to date, a notable increase compared to a 1.2 percent rise during the same period last year.
In contrast, import growth has also decreased this year, clocking in at 4.5 percent compared to 9 percent in FYTD25. On the services front, while services exports grew at a slower pace of 5.2 percent this year, down from 12 percent last year, a reduction in services imports has helped mitigate the impact on the services balance, the report highlights.
Point of View
It's crucial to understand the factors that influence India's trade dynamics. The current trends in exports to both Asian and European partners signal a resilient economy. Monitoring the US-India trade negotiations will be vital as we navigate the complexities of international trade. These developments reflect the nation's commitment to enhancing economic stability and growth.
NationPress
19/10/2025
Frequently Asked Questions
What is the current status of India's trade deficit?
India's trade deficit is expected to remain manageable due to increased exports to key Asian and European partners, with a projected current account deficit of 1.2-1.5 percent of GDP for FY26.
How do exports to Asian countries affect India's economy?
Increased exports to Asian countries like China, Hong Kong, and South Korea positively contribute to India's economy by boosting trade revenues and reducing the trade deficit.
What role do US-India trade negotiations play?
The progress of US-India trade negotiations is crucial, as successful talks could enhance trade relations and impact India's economic stability.
What factors are influencing gold and oil imports?
Seasonal demand is likely to increase gold imports, while lower oil prices may offer some relief, impacting overall import dynamics.
How did India's export growth perform in September?
India's export growth was solid at 6.8 percent in September, primarily driven by a surge in electronics exports.
