Surging merchandise exports, falling imports cut India’s August trade deficit by half

India’s trade deficit contracted by more than 54% to $9.9 billion in August 2025, driven by a surge in merchandise exports, a continued strong performance in services exports, and a significant reduction in merchandise imports. The trade deficit stood at $21.7 billion in August 2024.

The monthly trade data released by the Ministry of Commerce and Industry also showed that exports to the U.S. increased to about $6.86 billion in August 2025, as compared to $6.7 billion in August last year, despite 25% tariffs being imposed on Indian exports to the U.S. for most of that month, and 50% tariffs imposed for a few days at the end of the month.

‘Policies paid off’

“Despite the global uncertainties and the trade policy uncertainties, India’s exporters have done extremely well,” Commerce Secretary Sunil Barthwal said at a press conference to announce the data. “It shows that the policies of the Government of India have paid off well.”

India’s total exports increased to $69.2 billion in August 2025, up 9.3% over its level in August last year. Within this, merchandise exports increased to $35.1 billion in August 2025, compared to $32.9 billion in August last year, a growth of 6.7%.

Services exports increased to $34.1 billion in August 2025, compared to $30.4 billion in August last year.

On the import side, India’s total imports fell to $79 billion in August 2025, as compared to $85 billion in August last year, a contraction of 7%. This was driven by a 10.1% contraction in merchandise imports to $61.6 billion.

Services imports, on the other hand, increased marginally to $17.45 billion in August 2025 from $16.5 billion in August last year.

The relatively strong export performance in August has meant that the overall trade deficit in April-August of this financial year stood at $41.4 billion, down 20.1% over its level in the April-August 2024 period.