India’s trade deficit narrowed in August, even as exporters prepare for the fallout from steep U.S. tariffs imposed by President Donald Trump, Bloomberg reported, citing official data.
The trade gap stood at $26.49 billion last month, smaller than July’s eight-month high of $27.35 billion and below the $24.8 billion deficit forecast in a Bloomberg survey of economists. Imports dropped 10.1% year-on-year to $61.59 billion, while exports rose 6.7% to $35.1 billion, according to data released Monday by the Ministry of Commerce and Industry.
This was the first set of trade figures since Washington imposed a 25% levy on Indian goods on August 7, doubling it less than three weeks later in retaliation for New Delhi’s continued purchases of Russian oil. The 50% tariff rate is among the highest globally and risks eroding the competitiveness of Indian exports against rivals such as Vietnam and Bangladesh.
Despite the strain, diplomatic ties showed tentative improvement last week as Trump and Prime Minister Narendra Modi agreed to restart stalled trade talks. A U.S. delegation is scheduled to arrive in New Delhi Monday night, India’s chief negotiator Rajesh Agarwal said.
New Delhi is also fast-tracking negotiations with the European Union, with the next round of free trade agreement talks set for October 6–10. Commerce Secretary Sunil Barthwal said India is working to diversify its supply chains and reduce reliance on specific regions, while also identifying about 100 products where local manufacturing could replace imports.
The U.S. remains India’s largest export market, and analysts warn that labor-intensive industries such as textiles and jewelry are most vulnerable to the higher duties. Exporters had already ramped up shipments ahead of the tariff hikes, with outbound trade to the U.S. reaching $40.39 billion between April and August, up from $34.21 billion a year earlier, Bloomberg noted.
