$226 billion Brics deficit: India buys far more than it sells

By: Team India Tracker

India cannot avoid dependence on imported oil, commodities, machinery and components. The task is not simply to import less, but to change what India trades: export more, add value at home and reduce reliance on critical imports

India’s $226.1 billion merchandise trade deficit with its Brics partners in FY26 accounted for 67.6 per cent of its total trade gap. That is the number New Delhi should have in mind as it hosts the 18th Brics Summit on Saturday and Sunday.

The imbalance is stark. The 10 Brics partners supplied 41.5 per cent of India’s merchandise imports but accounted for only 21.7 per cent of its exports. India bought $321.8 billion of goods from the grouping and sold $95.7 billion. The question at the summit, therefore, is not simply how to deepen trade with Brics, but how to make it less one-sided.

The concentration of the deficit makes the picture clearer. China, Russia and the UAE together accounted for nearly 84 per cent of India’s Brics trade deficit. Together, they supplied $250.9 billion of goods — nearly a third of India’s total merchandise imports.

But these are three very different relationships. The deficit with China is principally a manufacturing problem; that with Russia is largely an energy story; and the UAE combines large energy imports with a sizeable two-way trading relationship.

China is by far the largest concern. India imported $131.6 billion of goods from China in FY26 and exported only $19.5 billion, leaving a deficit of $112.2 billion — almost half the entire Brics trade gap.

The significance of that deficit lies in what India buys. Much of it consists of machinery, electronics, components, chemicals and other industrial inputs. These imports are not merely consumer goods that can be replaced overnight. They are embedded in Indian manufacturing itself.

The harder task, therefore, is to build competitive Indian suppliers. Import substitution by itself is not the answer. India needs domestic firms capable of producing components and machinery at competitive prices, while moving into higher-value segments of manufacturing and expanding exports.

Russia presents a different equation. India imported $55.4 billion from Russia in FY26 and exported $4.5 billion, leaving a deficit of $50.9 billion.

Much of the change followed the Russia-Ukraine war, which began in February 2022, when Moscow offered crude oil at discounted prices. There was a clear economic rationale for buying it. Cheaper Russian crude helped India contain its energy import costs when global oil prices were under pressure.

But cheap oil came with an obvious trade consequence. Imports from Russia rose sharply without a corresponding increase in Indian exports. The resulting deficit is not necessarily evidence of a failed trading relationship; it reflects India’s dependence on imported energy and the limited range of goods it currently sells to Russia.

The UAE is different again. India imported nearly $64 billion from the UAE and exported $37.4 billion in FY26, producing a deficit of $26.5 billion. This is significant because India and the UAE have a free-trade agreement. An FTA, however, cannot by itself guarantee balanced trade, particularly when crude-oil imports are large.

The UAE remains India’s largest export destination within Brics. That qualification matters. A deficit with a trading partner is not necessarily a sign that an FTA has failed. What matters is whether the agreement allows Indian companies to expand their market presence and whether exports can eventually narrow the gap.

The rest of the Brics numbers underline the diversity of the grouping. India ran deficits with Saudi Arabia, Indonesia, South Africa and Brazil as well.

The Saudi Arabian deficit was $20.51 billion, with imports of $30.79 billion against exports of $10.28 billion. Indonesia produced a deficit of $15.80 billion, with imports of $20.29 billion and exports of $4.49 billion. The deficit with South Africa was $1.55 billion, with imports of $8.56 billion and exports of $7.01 billion. Brazil recorded a deficit of $1.03 billion, with imports of $8.05 billion and exports of $7.02 billion.

India ran surpluses with only three Brics members. Exports to Egypt were $3.87 billion against imports of $2.60 billion, producing a surplus of $1.27 billion. With Ethiopia, exports of $0.44 billion exceeded imports of $0.25 billion, giving a surplus of $0.19 billion. With Iran, exports of $1.26 billion against imports of $0.38 billion produced a surplus of $0.88 billion.

The export picture offers some encouragement. India’s overall merchandise exports have remained resilient despite geopolitical and shipping disruptions, while non-oil, non-gold exports grew strongly in the first quarter of FY27. But the Brics numbers show how much further India’s export capacity has to expand.

But more Brics trade is not automatically good news for India. Trade is useful when it delivers cheaper inputs, technology, investment and access to new markets. It becomes less useful when imports rise much faster than exports and too little of the value created is retained within the domestic economy.

The objective, therefore, should not be an arbitrary target for balancing the trade books. India will continue to need imported oil, commodities, machinery and components. The more important task is to change the composition of trade — through more Indian exports, greater domestic value addition and fewer critical import dependencies.

That is the real economic test for Brics. The grouping has already become a major pillar of India’s trade. The challenge is to ensure that deeper economic integration does not simply produce more imports, but also creates a stronger base for Indian manufacturing, exports and growth.