India’s merchandise trade deficit (MTD) widened to a higher-than-expected $25.0 billion in December 2025 from $20.6 billion in December 2024, amid a sustained double-digit growth in non-oil non-gold imports (+12.2%), even as export growth was muted at just 1.9% in the month. With a material widening in the MTD in Q3 FY2026, compared to the year-ago quarter, ICRA projects the current account deficit (CAD) to surge to 2.3% of GDP in Q3 FY2026, which would be the highest level in last 13 quarters. Nevertheless, the current account is likely to seasonally turn favourable in Q4 FY2026 to a mild surplus of sub-1% of GDP. Overall, ICRA estimates the FY2026 CAD at a benign 0.8% of GDP.

• Growth in merchandise imports outpaced that in exports: India’s merchandise exports inched up by 1% sequentially to $38.5 billion in December 2025. In YoY terms, export growth was quite tepid at 1.9% in December 2025, mainly supported by healthy shipments of electronic goods, followed by rice and poultry items, even as petroleum shipments contracted by 6.5% YoY in the month. However, merchandise imports increased by a stronger 8.8% YoY and 1.4% MoM to $63.6 billion in December 2025, stemming from a sustained double-digit expansion (+12.2%) in the non-oil non-gold segment, likely owing to healthy domestic demand and rising global commodity prices. Consequently, the MTD rose to $25 billion in December 2025 from $20.6 billion in the year ago month.
• Exports to the US eased by 1.8% YoY, while non-US region shipments were up 2.7% in December 2025: The exports to the US remained stable at $6.9 billion in December 2025, vis-à-vis November 2025, while displaying a YoY dip of 1.8%. In contrast, shipments to the non-US region rose by 2.7%, after an ~6% average growth during July-Nov 2025.

Source: Ministry of Commerce and Industry, GoI; CMIE; ICRA Research