New Delhi [India], July 13 : India's merchandise trade deficit likely narrowed modestly to USD 20.7 billion in June 2025, down from USD 21.9 billion in the previous month, driven by easing crude oil prices, muted gold imports, and a shift in sourcing strategy that helped offset global commodity volatility, said a report by Union Bank of India (UBI).
The report added that a sharp but temporary decline in global crude prices following a ceasefire between Israel-Iran, coupled with rising OPEC+ output, helped improve India's oil trade balance.
Although Brent crude prices recovered swiftly to an average of USD 69.80/bbl in June from USD 64.01/bbl in May, the broader supply outlook helped prevent a sharp increase in import costs.
India imported 4.66 million barrels per day (mbpd) of crude in June, slightly down from 4.72 mbpd in May, according to Vortexa.
Notably, Indian refiners ramped up purchases from Russia and the US, outpacing traditional suppliers in the Middle East. Russian imports alone hit a two-year high of 2-2.2 mbpd, while US oil shipments surged over 270 per cent year-on-year in the first four months of 2025.
According to the report this shift, driven by discounted Russian crude and strategic diversification, also reduced geopolitical risk exposure by avoiding the Strait of Hormuz.
However, India's petroleum product exports dipped nearly 10 per cent in June to 1.19 mbpd, down from 1.32 mbpd in May, limiting the extent of overall trade deficit improvement. Compared to June last year, exports also declined by 3.7 per cent.
On the other hand, the country's gold trade deficit also narrowed in June as soaring international prices, regulatory tightening, and rising recycling curbed imports.
Gold prices averaged USD 3,353/oz in June, up 5 per cent month-on-month and 32 per cent year-to-date in USD terms.
The domestic demand of the gold also remained tepid, with imports dipping to 30.56 tonnes in May from 34.87 tonnes in April which is further likely to fall in June.
India imported 16.59 million tonnes (MT) of coal via major ports, up 1.2 per cent year-on-year but down 2.1 per cent from May. Thermal coal accounted for 70.2 per cent of the total, rising 7.2 per cent year-on-year.
In policy actions, India imposed anti-dumping duties on four Chinese chemicals and banned jute and woven fabric imports from Bangladesh amid ongoing trade violations and diplomatic shifts. Additionally, iron ore pellet producers urged restrictions on imports from Oman, citing concerns over Iranian-origin cargoes undermining local industry.
"Going forward, commodity prices, especially oil and metals will remain on close watch to assess trends in trade deficit," the report added
The report further added that if the commodity price uptrend continues, then it will put pressure India's import bill in the coming months, adding that the softening global demand and weak export momentum could offset the impact on India's trade balance.