India’s Trade Deficit Widens to $30.21 Billion in September as Exports Rise 23%

Merchandise exports reach a four-month high of $44.40 billion, while imports grow at their slowest pace in six months.

India’s merchandise trade deficit widened to $30.21 billion in September 2026 from $26.86 billion in August, according to data released by the Department of Commerce. However, the deficit narrowed year-on-year (Y-o-Y) from around $33 billion as merchandise exports increased 23 per cent to $44.40 billion, their highest level in four months.

Merchandise imports rose 8 per cent Y-o-Y to $74.61 billion, marking the slowest growth in goods imports in six months.

Exports Record Broad-Based Growth

Commerce Secretary Rajesh Agrawal said export growth was supported by increased shipments across several sectors, particularly petroleum products, meat, dairy and poultry products, handicrafts and some cereals.

Engineering goods exports grew 21 per cent Y-o-Y to $12.17 billion in September. Electronic goods exports rose to $5.31 billion from $3.11 billion a year earlier, while petroleum product exports increased 32 per cent to $6.22 billion.

Exports of organic and inorganic chemicals also rose by a little over 24 per cent Y-o-Y to $2.94 billion.

Services Trade Surplus Estimated at $16.91 Billion

The Commerce Department estimated India’s services exports at $36.35 billion in September, nearly unchanged year-on-year. Services imports were estimated to have increased 9 per cent to $19.44 billion, resulting in a services trade surplus of $16.91 billion.

The Reserve Bank of India (RBI) is expected to release the final services trade figures later this month.

Icra Chief Economist Aditi Nayar said, “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,”

Crude Oil and Electronics Imports Increase

India’s crude oil imports rose nearly 31 per cent Y-o-Y to $18.34 billion in September. Imports of electronic goods increased nearly 52 per cent to $14.86 billion.

In contrast, gold imports nearly halved year-on-year to $1.8 billion. Agrawal attributed the decline to the increase 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.

US Leads Export Markets, China Remains Top Import Source

The United States remained India’s largest export market in September, with shipments rising nearly 48 per cent Y-o-Y to $8.03 billion.

Federation of Indian Export Organisations (FIEO) President SC Ralhan said, “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,”

China continued to be India’s largest import source, with imports rising nearly 32 per cent Y-o-Y to $14.86 billion in September. Indian exports to China increased 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 during the month, potentially led by crude oil shipments.

April–September Merchandise Exports Rise 19%

India’s merchandise exports totalled $259.89 billion during April–September FY27, registering growth of nearly 19 per cent year-on-year. Imports rose 16 per cent to $437.53 billion during the first six months of the financial year, taking the merchandise trade deficit to $177.64 billion.

Agrawal expressed optimism about export performance, saying merchandise exports could reach around $500 billion by the end of the current financial year.

Commenting on the first-half performance, Ralhan said, “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,”

Exports’ Share of GDP Recovers

Strong merchandise export growth also increased exports’ contribution to India’s 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, exports’ share of GDP declined to 11.3 per cent in FY26, compared with 11.7 per cent in FY25 and 12.5 per cent in FY24.

At 14 per cent of GDP in Q1 FY27, the export share has recovered to the level recorded in FY23, when annual merchandise exports reached a record high.