Key Takeaways
- India’s merchandise trade deficit increased to $30.21 billion in September.
- Imports grew faster than exports, driven by higher oil prices amid US-Iran conflict.
- India’s automobile exports rose 22.5% year-on-year in September.
India’s merchandise trade deficit widened to $30.21 billion in September, up from $26.86 billion in August, according to government data. This increase was due to faster growth in imports, which reached $74.61 billion, compared to $70.67 billion in August.
Merchandise exports also increased to $44.40 billion in September, from $43.81 billion in the previous month. The trade secretary, Rajesh Agrawal, highlighted the broad-based export growth across sectors including petroleum products, meat, dairy, poultry, electronic goods, handicrafts, and engineering goods.
The higher goods deficit coincided with the intensifying US-Iran conflict, which has exacerbated oil supply disruptions, adding to inflation risks in India, the world’s third-largest oil importer and Asia’s third-largest economy.
Brent crude futures have remained above $100 a barrel amid the Iran war, with attacks around the Strait of Hormuz surging over the past 10 days. Iran has stepped up strikes in response to the US blockade of its ports and tougher sanctions introduced last month.
India’s central bank raised interest rates earlier this month to counter inflation pressures and has announced a series of measures to support the rupee. The trade deficit in August narrowed as gold imports plunged, but gold imports in the first six months of the fiscal year 2026/27 fell 27.32% year-on-year to $19.27 billion.
Despite the trade deficit, export growth was broad-based, with the automobile sector showing resilience. India’s automobile exports rose 22.5% year-on-year to 684,481 vehicles in September, led primarily by a 26.8% jump in two-wheeler shipments to 544,797 units. Passenger vehicle exports, however, fell 2.2%.
Services exports stood at $36.35 billion, while imports were estimated at $19.44 billion. The US remained the top destination for Indian exports, with goods shipments rising to $50.81 billion in April-September from $45.82 billion a year earlier.
India is seeking to diversify its export markets, with a trade deal with New Zealand set to take effect next week and its pact with Britain already in force, while a broader agreement with the European Union is moving towards implementation.
