NEW DELHI: India’s trade deficit widened to $30.21 billion in September from $26.86 billion in August, data released by the Department of Commerce on Thursday showed. However, the deficit narrowed on a year-on-year (Y-o-Y) basis from around $33 billion as merchandise exports jumped 23 per cent Y-o-Y to a four-month high of $44.40 billion in September 2026.
India’s merchandise imports rose 8 per cent Y-o-Y in September to $74.61 billion. The pace of growth in goods imports was the slowest in six months.
The growth in goods exports was driven by a broad-based increase in shipments across sectors. There was particularly strong growth in petroleum products, meat, dairy and poultry products, handicrafts and some cereals, Commerce Secretary Rajesh Agrawal said while briefing journalists after the data release.
“Amid a modest expansion in the merchandise trade deficit and an expected easing in invisible earnings, led by tempering remittance inflows, we expect India’s current account deficit to widen to $13-15 billion in Q2 of FY27 from $4.2 billion in Q1, while printing marginally lower than the year-ago levels,” Icra Chief Economist Aditi Nayar said.
The commerce department estimated India’s services exports at $36.35 billion in September, nearly flat Y-o-Y, while services imports were estimated to have risen 9 per cent to $19.44 billion.
This resulted in an estimated services trade surplus of $16.91 billion. The Reserve Bank of India (RBI) is expected to release the final data on services trade later this month.
Engineering goods exports grew 21 per cent Y-o-Y to $12.17 billion, while outward shipments of electronic goods jumped to $5.31 billion in September from $3.11 billion a year ago.
Export of petroleum products increased 32 per cent to $6.22 billion. Organic & inorganic chemical exports surged a little over 24 per cent Y-o-Y to $2.94 billion.
India’s import of crude oil rose nearly 31 per cent Y-o-Y to $18.34 billion in September, while that of electronic goods imports jumped nearly 52 per cent to $14.86 billion.
On the other hand, gold imports nearly halved Y-o-Y to $1.8 billion in September. Agrawal attributed the fall in gold imports to hike in Customs duty on the precious metal in May.
India’s fertiliser imports also fell 22 per cent Y-o-Y to $1.84 billion in September.
The US remained India’s top export market in September, with exports jumping nearly 48 per cent Y-o-Y to $8.03 billion.
“The US retaining its position as our largest merchandise export market underscores the importance of this economic partnership.
Alongside strengthening established trade relationships, we must accelerate efforts to diversify export destinations and create fresh opportunities for Indian businesses,” Federation of Indian Export Organisations (Fieo) president SC Ralhan said.
China continued to be India’s largest import source, with inward shipment increasing a nearly 32 per cent Y-o-Y to $14.86 billion in September.
Exports to China also jumped a little over 24 per cent to $1.81 billion.
Imports from Russia rose nearly 26 per cent Y-o-Y to $5.86 billion in September, potentially led by crude oil shipments.
Cumulatively, goods exports stood at $259.89 billion during April-September, up nearly 19 per cent Y-o-Y.
Expressing optimism on India’s export growth, Agrawal said merchandise exports may reach around $500 billion by the end of the current financial year.
Ralhan said the strength of the first-half’s performance lies in the diversity of growth drivers.
“Technology-intensive exports are adding momentum alongside established sectors such as engineering, chemicals, and agriculture. Sustaining this balance, while expanding our market reach, will be crucial in the second half of the financial year,” Ralhan added.
Imports rose 16 per cent Y-o-Y to $437.53 billion in the first six months of FY27.
As a result, the merchandise trade deficit stood at $177.64 billion during the six-month period.
Strong growth in merchandise exports also increased their contribution to gross domestic product (GDP).
Exports accounted for 14 per cent of GDP in the first quarter of FY27, according to the latest available data.
Following a slowdown in global demand in FY24 and FY25, and steep US tariffs on Indian goods in FY26, the share of exports in GDP declined to 11.3 per cent in FY26 from 11.7 per cent in FY25 and 12.5 per cent in FY24.
At 14 per cent of GDP in Q1FY27, the share of exports has recovered to the level seen in FY23 — a year when annual merchandise exports were at a record high.
Source; Business Standard
