India’s merchandise trade deficit likely narrowed to USD 20.7 billion in June 2025—down from USD 21.9 billion in May—according to Union Bank of India (UBI). Lower crude prices, muted gold imports, and smarter sourcing strategies helped cushion the blow from global commodity swings. A ceasefire between Israel and Iran plus increased OPEC+ output triggered a drop in crude prices, easing India’s import bill. Meanwhile, a decline in gold imports—thanks to cooling demand and tighter regulations—also helped tamp down the deficit. With proactive shifts in sourcing and favorable global trends, India looks to have gained a modest trade footing.
Oil Advantage: Crude Cool‑Off Eases Deficit
- Brent crude prices averaged USD 69.80/bbl in June, up from USD 64.01/bbl in May, per UBI report.
- Despite the price rise, India’s import costs remained stable due to improved global supply conditions.
- Crude oil imports declined to 4.66 million barrels per day (mbpd) in June from 4.72 mbpd in May.
- Indian refiners increased oil purchases from Russia and the US, shifting away from traditional Middle Eastern suppliers.
- Russian crude imports hit a two-year high of 2–2.2 mbpd in June 2025.
- US oil imports surged 270% year-on-year in the first four months of 2025.
- This diversification strategy helped reduce geopolitical risks, particularly by avoiding the Strait of Hormuz.
Gold Gain: Imports Fall, Deficit Narrows
- Global gold prices averaged USD 3,353/oz in June, rising 5% month-on-month and 32% year-to-date.
- Despite rising prices, domestic demand for gold remained soft.
- Gold imports fell to 30.56 tonnes in May, down from 34.87 tonnes in April.
- June imports likely saw a further decline, as per trend indications.
- Union Bank of India (UBI) attributes the decline to:
- Soaring international gold prices.
- Regulatory tightening by Indian authorities.
- Increased gold recycling within the domestic market.
- These factors combined to narrow the gold trade deficit for India in June 2025.
Other Essentials: Coal Steady, Chemicals And Jute Under Watch
- India imported 16.59 million tonnes (MT) of coal via major ports in June 2025.
- This marks a 1.2% year-on-year increase.
- However, it reflects a 2.1% decline from May 2025.
- Thermal coal accounted for 70.2% of total coal imports.
- Key Policy Actions:
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- The Indian government imposed anti-dumping duties on four Chinese chemicals to curb unfair trade practices.
- It also banned jute and woven textile imports from Bangladesh, citing trade violations.
- Import restrictions were considered on iron-ore pellets from Oman, due to concerns about Iranian-origin cargoes affecting local industry.
- All measures aim to protect and promote domestic manufacturing sectors.
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Market Outlook & Tariff Risks
UBI predicts that commodity price trends—especially in oil and metals—will dictate future trade deficit movement. The report warns that if prices rise further and exports remain weak, India’s import bill could surge. The RBI and government are watching closely to maintain balance.
(With Inputs From ANI)
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