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India's merchandise trade deficit narrowed to $26.49 billion in August from $27.35 billion in July, according to provisional data released by the Commerce Ministry on Monday. The improvement came despite steep tariff hikes by the United States that weighed on Indian exports, IANS reported.

Merchandise exports slipped to $35.10 billion in August from $37.24 billion in July, marking a nine-month low. Imports too declined, to $61.59 billion from $64.59 billion in the previous month, providing some relief to the trade balance.

The fall in shipments followed Washington's decision to double duties on Indian goods. On August 27, the Donald Trump administration imposed an additional 25 per cent levy on Indian imports, taking the effective tariff rate to 50 per cent - one of the steepest on any US trade partner. According to IANS, exports to the US dropped to $6.86 billion in August from $8.01 billion in July.

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Commerce Secretary Sunil Barthwal said exporters had shown resilience despite the tariff shock. "August exports growth is driven by good performance of electronics, engineering, gems and jewellery, besides petroleum and pharma exports," IANS reported. Commerce and Industry Minister Piyush Goyal, in meetings with Export Promotion Councils earlier this month, assured industry that the government was working to cushion exporters from tariff-related disruptions.

In a significant relief step, the Directorate General of Foreign Trade (DGFT) has extended the export obligation period under the Advance Authorisation Scheme for products under mandatory Quality Control Orders from six months to 18 months. Officials said the change, requested by the Department of Chemicals and Petrochemicals, will help chemical and petrochemical exporters, a sector that contributed $46.4 billion in 2024-25 or 10.6 per cent of India's total exports.

Foreign media reported that the US decision was linked to India's continued purchases of Russian oil. Labour-intensive sectors such as garments, leather, gems and jewellery are seen among the worst hit. Last year, the US absorbed nearly $87 billion worth of Indian goods, underlining the risk to export growth. Trade negotiators from both sides are scheduled to meet in New Delhi on Tuesday to explore ways to ease tensions.

Services exports in August were estimated at $34.06 billion, compared with $31.03 billion in July, while imports stood at $17.45 billion, up from $15.40 billion. The combined goods and services trade deficit fell to $9.88 billion in August from $11.72 billion in July, and from $21.73 billion a year earlier.

The Reserve Bank of India will publish final services trade data with a one-month lag. During April-August, merchandise exports rose 2.52 per cent year-on-year to $184.13 billion, while imports grew 2.14 per cent to $306.52 billion. Services exports rose 10.57 per cent to $165.22 billion over the same period.

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Ankit Kumar is a Senior Sub Editor at Zee Business. He covers international affairs, politics, climate change, business, finance and global elections. With experience across digital med ...LATEST NEWSBy accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.