Trade Deals, Softening Oil Prices May Help Narrow India’s Trade Deficit: BoB Report

New Delhi, Apr 20 (BNP): India’s record trade deficit is expected to ease in the coming months, supported by anticipated trade agreements and a possible decline in global crude oil prices, according to a recent report by Bank of Baroda.

The report notes that elevated imports, particularly of energy products, have been a key driver of the widening trade gap in recent months. However, easing geopolitical tensions and improved global supply conditions could help stabilise oil prices, providing relief to India’s import bill.

At the same time, ongoing and potential trade deals are expected to improve export competitiveness and support outbound shipments, contributing to a gradual correction in the trade imbalance.

Economists highlighted that India’s external sector remains sensitive to fluctuations in global commodity prices, especially crude oil, which accounts for a significant share of import costs.

The report suggests that a combination of favourable global price trends and stronger trade linkages could help bring down the trade deficit from recent record levels in the near term.

Overall, while external risks remain, the outlook points toward a more stable trade environment if current trends in oil prices and trade negotiations continue.