Merchandise exports gain steam in April

Latest reading: Merchandise exports rose 9.0% on an annual basis in April (March: 0.7% yoy), the sharpest increase in six months and largely due to stronger shipments of engineering goods, petroleum products and electronics. However, merchandise imports soared 19.1% on an annual basis in April (March: +11.4% yoy), marking the strongest reading since August 2022, largely due to higher inbound shipments of coal plus chemical and petroleum products as domestic demand picked up on tax cuts and past interest rate reductions. As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 26.4 billion shortfall in April (March 2025: USD 21.5 billion deficit; April 2024: USD 19.2 billion deficit). This marked the biggest shortfall in five months and exceeded economist expectations. Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 289.8 billion deficit in April, compared to the USD 282.6 billion deficit in March.

Outlook: At the start of the year, our panelists expected India’s merchandise exports to grow 5.5% in 2025, but they now expected them to broadly flatline as a result of U.S. tariffs stifling external demand. Since 9 April, India has been subject to the global baseline 10% tariff, which will rise to 26% from 9 July unless a deal is done. India’s government recently said it was seeking an initial deal with Washington before July, with second and third stages to be completed by September–November and the end of next year, respectively. More positively, India recently penned a trade deal with the UK that is expected by British authorities to more than double bilateral trade by 2040. This follows other recent agreements with Australia and the UAE, highlighting India’s greater openness to trade in recent years.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Indian trade projections for the next ten years from a panel of 9 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable trade forecast available for Indian trade.

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