Trade gap narrows: Exports rise 7%, imports decline 10%

NEW DELHI: Goods exports rose 6.7% to $35.1 billion in Aug - possibly due to exporters advancing shipments to beat higher US tariffs - while imports dropped 10% to $61.6 billion, helping narrow the trade deficit.

"Despite global uncertainty, the trade policy uncertainty, India's exports have done extremely well. It shows that the policies have worked very well," said commerce secretary Sunil Barthwal. Aug marked the second straight month of near 7% export growth after two straight months of decline. Several exporters had rushed their consignments to the US after American President Donald Trump announced steep 50% additional tariffs on India, including 25% secondary sanctions for purchase of Russian oil.

Barthwal, however, said that businesses kept a constant watch on evolving opportunities, including tariffs and responded to the situation. Commerce ministry data showed that during April-Aug exports to the US grew 18.1% to $40.4 billion, while the value of India's outward shipments were estimated to have increased 2.5% to $184.1 billion. During this period India's imoport bill went up by 2.1% to just over $300 billion.

Going forward, businesses expect moderation as the impact of US tariffs bite. "While the increase in shipments in Aug shows the industry's resilience, there are early signs of stress, also due to the punitive tariffs imposed by the US. When compared with July export numbers, engineering exports have recorded a nearly 5% decline. Given that nearly $20 billion of engineering exports are exposed to the US tariff, the sector remains vulnerable," said Pankaj Chadha, EEPC India president.

Icra chief economist Aditi Nayar too suggested moderation. "Growth in India's exports to US slowed to a nine-month low of 7.2% from arond 25% in first seven months of 2025 as 25% penalties over and above the 25% reciprocal tariffs came into effect towards the end of the month."