What’s driving India’s import surge?

In September 2026, India’s crude oil import bill surged to $15.4 billion – up significantly from $11.7 billion the previous month. This sharp rise highlights a striking imbalance: India bought only 7 per cent more crude oil than a year earlier but paid 47 per cent more. The primary driver of this $15.4 billion bill was not a surge in domestic fuel consumption, but soaring global prices, with the Indian crude basket averaging $116 a barrel, compared with just $70 a barrel a year ago.

However, the gap between the two numbers is what captures the real problem. It’s the price, not the quantity, that is driving India’s external bill. While crude imports tell only part of the picture, electronics and gold also play a significant role in driving India’s imports. Together, the three are reshaping what India’s import surge means for the current account, the rupee and the government policy moving forward.

What happened in September was not an isolated incident. During April-September 2026, India’s crude import bill reached $90.6 billion, about 47 per cent higher than a year earlier, though the number of barrels purchased remained almost at the same level – 122.7 million tonnes in 2026, as against 121.8 million during the same period in the previous year. Since crude makes up almost one-fifth of India’s total merchandise imports, any increase in the price is directly reflected in the trade deficit. 

Moreover, India has less room to negotiate. Russia supplied 35 per cent of crude imports in September 2026, yet even the single largest supplier could not offset the crude oil prices that have risen by about 67 per cent in a year. With tensions in West Asia, crude oil prices are only expected to be elevated in the coming months. 

While crude oil gives only one part of the story of India’s imports, electronics on the other hand, too, is contributing towards India’s rising import bill. In September 2026, India’s electronic goods imports amounted to $14.9 billion, almost the same as crude, and marking an increase of 51.5 per cent on an annual basis. During the same month, electronic exports increased by about 70 per cent. The two figures are closely connected. While India exports the finished product, the country still remains heavily reliant on upstream, high-value components, including high-end processors and memory chips, which makes the electronics bill the second highest in the import basket, following crude oil. 

While crude oil and electronics were the main drivers of India’s import bill, gold offered a rather contrasting picture. Following the government’s decision to raise import duties to 15 per cent in May 2026, gold imports declined by 27 per cent to $19.3 billion during April-September 2026, compared with $26.5 billion during the corresponding period of the previous year. Gold recorded a sharp decline in September 2026, where imports fell by 81 per cent. While gold imports rose ahead of the festive season, thereby adding to the country’s import bill, however, this year, the import duties have curbed demand. While policy can influence the demand for certain imports, commodities like crude oil are highly dependent on market movements.

Overall merchandise imports increased by 8 per cent to $74.6 billion in September 2026, and the trade deficit stood at $30.12 billion. While India may have achieved success in the final assembly of electronics, the economy continues to remain highly dependent on the various components required to manufacture the final product. With India operating primarily as an assembly hub, the domestic value addition remains around 20-23 per cent, leaving a significant share of the value chain dependent on imported components. As a result, electronic components continue to account for a large share of India’s import basket, second only to crude oil.
Meanwhile, as the West Asia conflict continues to escalate, crude oil imports are likely to add further pressure to India’s import bill, making it a major challenge at least for the near future.