India’s Merchandise Trade Deficit Narrows To $26.86 Billion In August As Exports Surge 26%

India’s merchandise trade deficit narrowed to $26.86 billion in August, compared with $27.22 billion in the same month last year and $31.98 billion in July, according to data released by the Department of Commerce on Tuesday.

The improvement came as merchandise exports grew substantially faster than imports during the month. Goods exports increased 26% year-on-year (Y-o-Y) to $43.81 billion, while imports rose 14% Y-o-Y to $70.67 billion.

Between April and August, India’s merchandise exports totalled $215.91 billion, registering growth of nearly 18% from the corresponding period a year earlier.

Merchandise imports also expanded by around 18% to $363 billion during the first five months of the financial year. Consequently, the merchandise trade deficit for the April-August period stood at approximately $147 billion.

The acceleration in merchandise exports has also lifted their share of India’s gross domestic product (GDP), reversing a decline seen over the previous three financial years. The latest available data showed that merchandise exports accounted for 14% of GDP in the first quarter of FY27.

India’s export share had weakened amid softer global demand in FY24 and FY25, followed by higher US tariffs on Indian products in FY26. As a result, exports as a proportion of GDP declined to 11.3% in FY26, from 11.7% in FY25 and 12.5% in FY24.

However, the 14% share recorded in Q1FY27 represents a recovery to the level last seen in FY23. That year also marked a record high for India’s annual merchandise exports.