India's Trade Deficit Shrinks as Exports Surge in 2025

India's trade deficit has notably decreased to USD 3.51 billion in June 2025, nearly halving from USD 7.30 billion in June 2024, driven by a robust export sector, official figures revealed on Tuesday. This reduction underscores India's strengthened export dynamics, buoyed by solid demand in primary global markets and substantial service sector expansion.

In June 2025, overall exports, comprising both merchandise and services, surged to USD 67.98 billion from USD 63.83 billion in June 2024, marking a 6.5% growth. Concurrently, imports saw a slight rise to USD 71.50 billion from USD 71.14 billion the previous year, hinting at stable domestic consumption and declining global commodity prices.

The improved trade figures represent a positive development for India's current account balance and wider economic indicators. The trade gap had also reduced in May to USD 6.62 billion from USD 9.35 billion the previous year. The government's Production Linked Incentive (PLI) scheme, enhancing export capabilities across 14 sectors including electronics and EVs, has been a key driver in this growth.

The PLI scheme aims to stimulate India's export-driven growth, position manufacturers competitively on the global stage, attract foreign investments, boost export integration, and cut down import reliance. The government has ambitiously set a target of achieving USD 1 trillion in exports for the fiscal year 2025-26.

Furthermore, India's export growth is poised for a boost from various free trade agreements (FTAs), with new deals inked or under negotiation, particularly with the UK and UAE. At an industry summit, Commerce and Industry Secretary Sunil Barthwal emphasized the significant role of FTAs in fostering innovation, as exemplified by the special innovation chapter in the India-UK FTA, aimed at enhancing collaborative corridors.

(With inputs from agencies.)