India’s merchandise trade deficit is projected to rise to $300 billion in the 2025–26 fiscal year, up from $287 billion last year, driven by sluggish exports and robust import growth. According to an ICICI Bank report, weaker demand in major global markets—excluding the U.S.—has slowed export momentum. U.S. demand remains relatively high due to advance orders ahead of potential tariffs. Meanwhile, strong domestic consumption is expected to boost imports further, potentially widening the trade imbalance.