August 2025 trade deficit narrows marginally to $26.49 billion

17 Sep 2025 , 12:18 PM

INDIA AUGUST 2025 TRADE – DATA CHECK

For August 2025, the real concern was not the trade deficit but the export figure. Merchandise exports, at $35.10 Billion, were at a 9-month low. This was a direct outcome of exports to the US falling more than 30% in August to $6.87 Billion.  Clearly, the steep tariffs imposed by Trump are pinching Indian exports of apparel, textiles, leather, gems, jewellery, and shrimps. Some of the items of exports that fell sharply yoy include tobacco, cashew, oil meals, iron ore, jute, textiles, and yarn; largely comprising US exports.

Key contributors to exports in August 2025 were Engineering Goods $9.90 Billion (+4.9%), Petroleum Products $4.48 Billion (+6.5%), Electronic Goods $2.93 Billion (+25.9%), Drugs & Pharmaceuticals $2.51 Billion (+6.9%), Organic & Inorganic Chemicals $2.42 Billion (+3.8%), and Gems & Jewellery $2.31 Billion (+15.6%). Key import contributors were crude & petroleum products $13.3 Billion (+9.4%), Electronic Goods $9.73 Billion (+8.4%), Gold $5.44 Billion (-56.7%), Machinery $5.15 Billion (+3.1%), Chemicals $2.49 Billion (-5.2%), Non-ferrous Metals $2.48 Billion (+5.0%), and Transport Equipment $2.29 Billion (-26.5%).

Top export destinations for August 2025 were United States $6.87 Billion, United Arab Emirates (UAE) $3.25 Billion, the Netherlands $1.83 Billion, China $1.22 Billion, and United Kingdom $1.15 Billion. Top import originating nations were China $10.91 Billion, Russia $4.84 Billion, United Arab Emirates (UAE) $4.67 Billion, United States $3.60 Billion, Saudi Arabia $2.52 Billion, and Switzerland $2.35 Billion.

HOW MERCHANDISE TRADE EVOLVED IN LAST 1 YEAR

Here is the monthly data of merchandise exports, imports, and trade deficit.

Monthly Data	Exports ($ Billion)	Imports ($ Billion)	Total Trade ($ Billion)	Trade Deficit ($ Billion)
Aug-24	34.71	64.36	99.07	-29.65
Sep-24	34.58	55.36	89.94	-20.78
Oct-24	39.20	66.34	105.54	-27.14
Nov-24	32.03	63.86	95.89	-31.83
Dec-24	38.01	59.95	97.96	-21.94
Jan-25	36.43	59.42	95.85	-22.99
Feb-25	36.91	50.96	87.87	-14.05
Mar-25	41.97	63.51	105.48	-21.54
Apr-25	38.49	64.91	103.40	-26.42
May-25	38.73	60.61	99.34	-21.88
Jun-25	35.14	53.92	89.06	-18.78
Jul-25	37.24	64.59	101.83	-27.35
Aug-25	35.10	61.59	96.69	-26.49

Data Source: DGFT (# – All time high trade deficit)

How do trade figures compare with 12-month averages. Over last 12 months, the average merchandise exports stood at $36.95 Billion, while average merchandise imports stood at $60.65 Billion. For August 2025 exports are lower but imports are higher than the average. The average trade deficit in last 12 months stood at $(23.70) Billion; with the August 2025 trade deficit sharply higher at $(26.49) Billion. In August 2025, total trade at $96.69 Billion was below the previous 12-month average of $97.60 Billion.

TRADE GAP – EXPORT BOOSTERS AND IMPORT TRIMMERS

Here are star export performers in August 2025, on percentage increase in exports yoy. Cereals (+89.7%), Electronic Goods (+25.9%), Mica / Coal / Ores (+24.6%), Tea (+20.5%), Meat / Dairy / Poultry (+17.7%), and Gems & Jewellery (+15.6%) were the key export growth drivers in August 2025.  Major import trimmers in August 2025 were Project Goods (-90.6%), Pulses (-64.1%), Silver (-59.7%), Gold (-56.7%), Newsprint (-35.3%), and Leather (-27.1%).

TRADE DATA BREAK-UP FOR AUGUST 2025

Here is a break up of the merchandise and services export and import data for August 2025, with comparable figures.

Macro Variables (Trade Related)	Aug-25 ($ Billion)	Jul-25 ($ Billion)	Aug-24 ($ Billion)	Change YOY (%)
Merchandise Exports	35.10	37.24	32.89	6.72%
Merchandise Imports	61.59	64.59	68.53	-10.13%
Total Merchandise Trade	96.69	101.83	101.42	-4.66%
Merchandise Trade Deficit	-26.49	-27.35	-35.64	-25.67%
Services Exports	34.06	31.03	30.36	12.19%
Services Imports	17.45	15.40	16.46	6.01%
Total Services Trade	51.51	46.43	46.82	10.02%
Services Trade Surplus	16.61	15.63	13.90	19.50%
Combined Exports	69.16	68.27	63.25	9.34%
Combined  Imports	79.04	79.99	84.99	-7.00%
Overall Trade Volume	148.20	148.26	148.24	-0.03%
Overall Trade Deficit	-9.88	-11.72	-21.74	-54.55%

Data Source: DGFT and RBI

What is the big picture? For August 2025 the net deficit at $9.88 Billion is -54.6% lower than the year ago period. It is also lower than the previous month. The services surplus has offset 62.7% of the merchandise trade deficit in August 2025, compared to 57.1% in July. The narrowing of the overall deficit can be attributed to a lower trade deficit and an improved services surplus in August 2025; compared to July.

CUMULATIVE TRADE DATA FOR FY26 (APR-AUG)

Having seen the monthly picture of August 2025, here is a cumulative 5-month view.

Macro Variables (Year-to-Date)	FY26 (Apr-Aug)	FY26 (Apr-Jul)	FY25 (Apr-Aug)	Change YOY (%)
Merchandise Exports	184.13	149.20	179.60	2.52%
Merchandise Imports	306.52	244.01	300.12	2.13%
Total Merchandise Trade	490.65	393.21	479.72	2.28%
Merchandise Trade Deficit	-122.39	-94.81	-120.52	1.55%
Services Exports	165.22	128.43	149.43	10.57%
Services Imports	84.25	64.90	81.18	3.78%
Total Services Trade	249.47	193.33	230.61	8.18%
Services Trade Surplus	80.97	63.53	68.25	18.64%
Combined Exports	349.35	277.63	329.03	6.18%
Combined  Imports	390.77	308.91	381.30	2.48%
Overall Trade Volume	740.12	586.54	710.33	4.19%
Overall Trade Deficit	-41.42	-31.28	-52.27	-20.76%

Data Source: DGFT and RBI (Trade data in Billion $)

The overall trade deficit, combining merchandise deficit and services surplus, at $(41.42) Billion; is sharply lower compared to the same period last year. The current account deficit data for FY25 came in quite encouraging at just 0.6% of GDP for the full year, thanks to a strong trade surplus in the fourth quarter. For FY26, Q1 has been very impressive at just 0.2% CAD as a share of GDP. A lot will depend on how the services surplus, going ahead, offsets the trade deficit, at a time when export of goods will be under constant pressure.