India’s merchandise exports surged nearly 20% in July as exporters rerouted through Omani and UAE ports amidst ongoing West Asian conflicts, though the trade deficit widened and sectoral disparities remain.
India’s merchandise exports rose nearly 20% year on year in July, a sharp increase that suggests exporters have adapted to disruption in West Asia by shifting routes and markets, even as the conflict continues to test supply chains. Official trade data indicate that shipments have increasingly been diverted away from vulnerable maritime corridors, with cargo moving through Omani and United Arab Emirates ports instead of Jebel Ali, helping businesses keep goods flowing despite the higher logistical burden.
The figures build on a strong first quarter of the 2026-27 financial year, when merchandise exports climbed 15.92% to $129.32 billion and total exports, including services, rose 11.37% to $232.73 billion, according to data reported by Business Standard and DD India. That early momentum was driven largely by engineering goods and electronics, while non-petroleum exports also expanded at a healthy pace, pointing to broader strength in manufacturing and value-added sectors rather than a narrow commodity-led rebound.
Even so, the improved export performance has not erased India’s trade imbalance. June’s merchandise trade deficit widened to about $30.4 billion, the largest for that month in at least five years, as imports jumped faster than exports, according to figures cited by Trading Economics, Mint and Fortune India. Higher energy costs were a major factor, and the deficit for the June quarter rose markedly from a year earlier, underscoring how rising import bills can offset gains in outbound shipments.
There is also a longer-term concern beneath the headline growth. While rerouted shipping shows resilience, it is likely adding freight and insurance costs that could weigh on competitiveness if the disruption persists. At the same time, labour-intensive industries such as apparel, leather and tea have not shared equally in the export upswing, suggesting that India’s trade story remains uneven: goods exports are proving more adaptable, but the structure of imports and sectoral weakness still leaves the external account exposed.
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