In August, India’s exports rose for the second consecutive month to US$ 35.1 billion, narrowing the trade deficit to US$ 26.49 billion, despite new US tariffs. Merchandise exports were driven by engineering goods, electronics, pharmaceuticals, and chemicals, while non-petroleum, non-gems and jewellery exports grew 6.1% to US$ 28.31 billion. Services exports surged 12.18% to US$ 34.06 billion, generating a US$ 16.61 billion surplus. Resilient exports were supported by front-loading of US-bound shipments. Imports declined 10.1%, helping contain the trade gap amid global uncertainties and tariff-related pressures.
India-US trade talks have resumed, with negotiators aiming for interim agreements to ease tensions and stabilize markets.
India’s exports rose for the second straight month in August even as new US tariffs imposed by President Donald Trump came into force. According to data released by the Department of Commerce, the trade deficit eased to US$ 26.49 billion in August, down from an eight-month high of US$ 27.35 billion in July and sharply lower than the record US$ 35.64 billion logged in August 2024. However, overall exports slipped to a nine-month low of US$ 35.10 billion.
The US had imposed a 25% reciprocal tariff on Indian goods in early August following stalled trade negotiations. Days later, Washington announced an additional 25% sanction in response to India’s continued purchase of Russian oil. These tariffs are among the highest globally and could erode the competitiveness of Indian exports, especially for labor-intensive products, relative to regional rivals like Vietnam and Bangladesh.
As the punitive measures only came into effect on August 27, analysts believe their full impact will become evident in the months ahead. They cautioned that the tariffs could substantially curb exports to the US in September, leading to a sharp drop in overall shipments and a likely widening of the trade deficit.
The US tariffs pose a risk to India’s growth momentum as the country pursues its 2047 high-income goal. According to economists, the duties could reduce GDP growth by 0.5–0.8 percentage points, though recent tax cuts may soften the impact by around 0.2 percentage points. Forecasts now project growth at 6–7% if the US tariffs remain in place.
Merchandise exports rise despite US tariffs
India’s exports recorded a 6.7% year-on-year rise in August, touching US$ 35.1 billion, aided in part by a low base of US$ 32.9 billion in August 2024. On a sequential basis, however, shipments declined 5.7% from US$ 37.24 billion in July.
Source: Department of Commerce
During the month of August, merchandise export growth was driven by– engineering goods (4.91%), electronics (25.93%), pharmaceuticals (6.94%), and organic and inorganic chemicals (3.76%).
- Electronic goods export: US$ 2.93 billion,
- Engineering goods: US$ 9.9 billion,
- Gems and jewellery: US$ 2.31 billion,
- Petroleum products: US$ 4.48 billion, and
- Pharmaceuticals: US$ 2.51 billion.
Non-petroleum, non-gems and jewellery exports—considered a key gauge of core trade performance—rose 6.1% to US$ 28.31 billion.
Services exports gain momentum
Services exports climbed 12.18% to US$ 34.06 billion in August, while services imports increased 6% to US$ 17.45 billion, generating a surplus of US$ 16.61 billion. (The Department of Commerce noted, however, that the services trade figures for August are provisional estimates and will be revised once the Reserve Bank of India issues its updated data.) Between April and August 2025, services exports totaled US$ 165.22 billion, while imports amounted to US$ 84.25 billion, resulting in a trade surplus of US$ 80.97 billion, up from US$ 68.25 billion in the same period last year.
The United States remained India’s largest export destination in August, though exports to the US declined to US$ 6.86 billion. Other major destinations were the UAE at US$ 3.24 billion, the Netherlands at US$ 1.83 billion, China at US$ 1.21 billion and the UK at US$ 1.14 billion.
Cumulative merchandise and services exports reached US$ 69.16 billion in August, up from US$ 63.25 billion a year earlier. From April to August 2025, cumulative exports totaled US$ 349.35 billion, marking a 6.18% increase over US$ 329.03 billion during the same period in 2024.
One reason exports remained resilient was the front-loading of orders before tariffs came into effect. The outbound shipments to the US between April and August surged to US$ 40.39 billion, a significant rise from US$ 34.21 billion in the same period last year. Front-loading, a common trade strategy, involves pushing activities or shipments earlier than planned to avoid upcoming policy changes—in this case, Trump’s tariff measures.
Commerce Secretary Sunil Barthwal said exports have held up well despite global headwinds, reflecting the positive impact of government policies. He added that the recently announced GST-related reforms are expected to further enhance competitiveness.
Imports decline
Imports, meanwhile, fell sharply by 10.1% to US$ 61.59 billion, helping to contain the deficit. Gold imports rose to US$ 5.4 billion in August, up from US$ 3.9 billion in July, while crude oil imports eased to US$ 13.2 billion compared with US$ 15.5 billion in the previous month.
In August, major imports included:
- vegetable oils at US$ 2 billion,
- fertilizers at US$ 1.65 billion,
- coal, coke, and briquettes at US$ 2 billion,
- petroleum products at US$ 13.26 billion,
- chemicals at US$ 2.49 billion, and
- electronic items at US$ 9.73 billion.
Gold imports fell sharply by 56.7% to US$ 5.4 billion from US$ 12.5 billion in August 2024. Non-petroleum, non-gems and jewellery imports totaled US$ 41.02 billion, remaining largely unchanged from US$ 41.41 billion a year earlier.
China remained the largest source at US$ 10.91 billion, followed by Russia (US$ 4.83 billion), the UAE (US$ 4.66 billion), the US (US$ 3.6 billion), and Saudi Arabia (US$ 2.5 billion).
Cumulative merchandise and services imports totaled US$ 79.04 billion, down from US$ 84.99 billion in August 2024.
India-US trade talks resume
The India-US relationship is witnessing renewed momentum, with President Donald Trump and Prime Minister Narendra Modi agreeing to restart trade talks. Trump has recently adopted a conciliatory stance, calling Modi a “close friend” and underlining the “special relationship” between the two nations. Both leaders expressed confidence in realizing the “limitless potential” of bilateral trade while reaffirming their commitment to strengthening economic and strategic ties.
As part of this renewed engagement, senior officials from both countries are scheduled to meet in New Delhi this week, a development seen as crucial to easing trade frictions and finding common ground. The meeting follows the cancellation of a US visit originally planned for August 25–29, which was called off after disagreements over Washington’s demand to access India’s vast agricultural and dairy markets.
The upcoming dialogue will be led by Brendan Lynch, US Assistant Trade Representative for South and Central Asia, and India’s chief negotiator Rajesh Agrawal, who is expected to push for an interim trade agreement to provide relief for exporters and stabilize markets.
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FAQs
How did India’s exports perform in August 2025?
India’s exports rose for the second consecutive month to US$35.1 billion, a 6.7% year-on-year increase, despite new US tariffs.
Which sectors drove export growth?
Engineering goods, electronics, pharmaceuticals, and chemicals were the major contributors, while non-petroleum, non-gems and jewellery exports grew 6.1% to US$28.31 billion.
What was the trend in services exports?
Services exports surged 12.18% to US$34.06 billion, generating a surplus of US$16.61 billion, which helped cushion merchandise trade pressures.
How did imports fare during the month?
Imports declined 10.1% to US$61.59 billion, led by lower crude oil purchases, though gold imports increased compared to July.
What was India’s trade deficit in August?
The trade deficit narrowed to US$26.49 billion, down from US$27.35 billion in July and sharply lower than the record US$35.64 billion in August 2024.
Which countries are India’s top export destinations?
The United States remained the largest export market at US$6.86 billion, followed by the UAE, Netherlands, China, and the UK.
