September 2025 trade deficit widens to $32.15 billion on tariff hit

17 Oct 2025 , 08:06 AM

INDIA SEPTEMBER 2025 TRADE – DATA CHECK

For September 2025, trade deficit spiked to a disconcerting level of $32.15 Billion. The tariffs imposed by the US on Indian exports had its impact on Indian goods and services. Apart from the spike in goods imports, the services exports were also lower yoy. For September 2025, it was not just that the merchandise trade deficit spike, but even the overall deficit was sharply up. Clearly, the tariffs may be on goods, but it appears to be having its impact on the services surplus too.

Key contributors to exports in September 2025 were Engineering Goods $10.11 Billion (+2.9%), Petroleum Products $4.96 Billion (+15.2%), Electronic Goods $3.12 Billion (+50.5%), Gems & Jewellery $2.84 Billion (+0.4%), Drugs & Pharmaceuticals $2.62 Billion (+2.6%), and Organic & Inorganic Chemicals $2.38 Billion (+1.8%). Key import contributors were crude & petroleum products $14.0 Billion (-5.9%), Electronic Goods $9.82 Billion (+15.5%), Gold $9.62 Billion (+106.9%), Machinery $5.00 Billion (+9.4%), Transport Equipment $2.62 Billion (+2.7%), Non-ferrous Metals $2.44 Billion (+16.2%), and Chemicals $2.33 Billion (-4.0%).

Top export destinations for September 2025 were United States $5.47 Billion, United Arab Emirates (UAE) $3.58 Billion, the Netherlands $1.61 Billion, China $1.47 Billion, and Hong Kong $1.12 Billion. Top import originating nations were China $11.32 Billion, United Arab Emirates (UAE) $6.63 Billion, Russia $4.67 Billion, United States $3.99 Billion, Saudi Arabia $2.82 Billion, and Hong Kong $2.54 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)
Sep-24	34.58	55.36	89.94	-20.78
Oct-24	39.20	66.34	105.54	-27.14
Nov-24	32.11	69.95	102.06	-37.84#
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
Sep-25	36.38	68.53	104.91	-32.15

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 $36.99 Billion, and average merchandise imports stood at $60.93 Billion. For September 2025 exports are lower but imports are sharply higher than the average. The average trade deficit in last 12 months stood at $(23.93) Billion; with the September 2025 trade deficit sharply higher at $(32.15) Billion. In September 2025, total trade at $104.91 Billion was sharply above the previous 12-month average of $97.92 Billion.

TRADE GAP – EXPORT BOOSTERS AND IMPORT TRIMMERS

Here are star export performers in September 2025, on percentage increase in exports yoy. Cashew (+106.4%), Cereals (+58.2%), Iron Ore (+52.3%), Electronic Goods (+50.5%), Meat / Dairy / Poultry (+32.3%), Marine Products (+23.4%), Tea (+22.1%) were the key export growth drivers in September 2025.  Major import trimmers in September 2025 were Pulses (-55.1%), Newsprint (-17.7%), Dyeing / Tanning Materials (-16.6%), Coal / Coke / Briquettes (-16.4%), Iron & Steel (-7.6%), and Petroleum & Crude Products (-5.9%).

TRADE DATA BREAK-UP FOR SEPTEMBER 2025

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

Macro Variables (Trade Related)	Sep-25 ($ Billion)	Aug-25 ($ Billion)	Sep-24 ($ Billion)	Change YOY (%)
Merchandise Exports	36.38	35.10	34.08	6.75%
Merchandise Imports	68.53	61.59	58.74	16.67%
Total Merchandise Trade	104.91	96.69	92.82	13.03%
Merchandise Trade Deficit	-32.15	-26.49	-24.66	30.37%
Services Exports	30.82	34.06	32.60	-5.46%
Services Imports	15.29	17.45	16.54	-7.56%
Total Services Trade	46.11	51.51	49.14	-6.17%
Services Trade Surplus	15.53	16.61	16.06	-3.30%
Combined Exports	67.20	69.16	66.68	0.78%
Combined  Imports	83.82	79.04	75.28	11.34%
Overall Trade Volume	151.02	148.20	141.96	6.38%
Overall Trade Deficit	-16.62	-9.88	-8.60	93.26%

Data Source: DGFT and RBI

What is the big picture? For September 2025 the net deficit at $16.62 Billion is 99.3% higher than the year ago period. It is also sharply higher than the previous month. The services surplus has offset just 48.3% of the merchandise trade deficit in September 2025, sharply lower than the last 2 months. The widening of the overall deficit can be attributed to a sharp widening of the merchandise trade deficit, combined with lower services exports. In fact, exports of services are lower on a yoy basis as well as on a sequential basis.

CUMULATIVE TRADE DATA FOR FY26 (APR-SEP)

Having seen the monthly picture of September 2025, here is a cumulative 6-month view.

Macro Variables (Year-to-Date)	FY26 (Apr-Sep)	FY26 (Apr-Aug)	FY25 (Apr-Sep)	Change YOY (%)
Merchandise Exports	220.12	184.13	213.68	3.01%
Merchandise Imports	375.11	306.52	358.85	4.53%
Total Merchandise Trade	595.23	490.65	572.53	3.96%
Merchandise Trade Deficit	-154.99	-122.39	-145.17	6.76%
Services Exports	193.18	165.22	182.03	6.13%
Services Imports	97.68	84.25	97.73	-0.05%
Total Services Trade	290.86	249.47	279.76	3.97%
Services Trade Surplus	95.50	80.97	84.30	13.29%
Combined Exports	413.30	349.35	395.71	4.45%
Combined  Imports	472.79	390.77	456.58	3.55%
Overall Trade Volume	886.09	740.12	852.29	3.97%
Overall Trade Deficit	-59.49	-41.42	-60.87	-2.27%

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

The overall trade deficit, combining merchandise deficit and services surplus, at $(59.49) Billion; is almost at par with the corresponding period last year. However, the difference is that, in the current year, the Indian economy has to contend with tariffs on exports as well as the H1-B visa restrictions. 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. In addition, the Q1FY26 CAD has been very impressive at just 0.2% CAD as a share of GDP. However, India now embarks on an uncertain period of goods and services trade and the third and fourth quarter could really hold the key to India’s current account deficit (CAD) for FY26.