India’s Trade Deficit Narrows in August as Imports & Exports Both Decline

India’s merchandise trade deficit fell in August, slipping to U.S. $26.49 billion from U.S. $27.35 billion in July, according to provisional government data. 

Exports & Imports Movement

• Exports dropped to U.S. $35.10 billion in August, from U.S. $37.24 billion in the previous month. 
• Imports also declined, falling to U.S. $61.59 billion, down from U.S. $64.59 billion in July. 

Key Drivers and Government Measures

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Exports have been under pressure partly because of stalled trade talks with the United States. U.S. tariffs applied to Indian goods have impacted shipment volumes, especially since the U.S. is a major export destination for India, responsible for about 20% of India’s goods exports. 

In reaction, the government relaxed some rules under the Advance Authorisation Scheme. This allows exporters to import certain raw materials duty‑free, which aims to ease input costs amid the tariff environment. 

Trade in Services & Overall Deficit

• On the services front, in August, India exported services worth U.S. $34.06 billion and imported U.S. $17.45 billion. 
• Taking goods and services together, the overall trade deficit stood at U.S.$9.88 billion during August. 

Provisional data shows that India's merchandise trade deficit decreased from over $27 billion in July to around $26 billion in August.  With the U.S. making up around 20% of shipments, exports are still under pressure because of the postponed India-U.S. trade agreement. In the face of continued U.S. tariffs, the government relaxed the Advance Authorisation Scheme requirements to assist exporters, permitting duty-free imports of raw materials.

Conclusion

While India’s trade deficit narrowed slightly in August, the drop in exports underscores vulnerability amid tariffs and lagging trade negotiations. Government relief via eased authorisation norms may help exporters, but sustained improvement likely depends on progress in international trade policy and broader demand.