India’s Trade Deficit and Export-Import Overview

India's trade deficit reached a 13-month high in September, largely due to increased bullion imports. Despite a 6.7% year-on-year (Y-o-Y) growth in merchandise exports to $36.38 billion, imports surged by 16.7% to $68.53 billion, thus widening the trade deficit to $32.15 billion.

• The trade deficit in September 2024 was $24.65 billion.
• Services exports contracted by 5.5% to $30.82 billion, while imports decreased by 7.6% to $15.3 billion, resulting in a service trade surplus of $15.5 billion.
• The rise in imports was driven by: 
  • A 107% increase in gold imports.
  • A 139% increase in silver imports.
  • A 202% rise in fertilizer shipments.
  • A 15% increase in electronics imports.

Impact of U.S. Tariffs

Shipments to the U.S. contracted by nearly 12% Y-o-Y due to a 50% tariff that took full effect in September, resulting in exports to the U.S. falling from $6.87 billion in August to $5.43 billion in September.

• 55% of India's total merchandise exports to the U.S. are expected to be affected by the additional tariff.
• Sectors like shrimp, textiles, and gems and jewellery are anticipated to be significantly impacted.
• Commerce Secretary Rajesh Agrawal highlighted that 45% of exports to the U.S. remain outside the tariff scope, with ongoing assessments on the specific impact.

Mid-Year Export and Import Performance

During the first half of FY26 (April-September), India's goods exports increased by 3% to $220.12 billion, with imports rising by 4.5% to $375.11 billion.

• Non-petroleum and non-gems and jewellery exports, indicators of export health, grew by 6% to $28.59 billion.
• Key growth drivers included: 
  • Engineering goods: 2.93% growth
  • Electronics: 50.54% growth
  • Drugs and pharmaceuticals: 2.56% growth
  • Organic and inorganic chemicals: 1.76% growth