India’s Merchandise Exports Rise 6.7% in August 2025, Trade Deficit Narrows

India’s merchandise exports registered a year-on-year growth of 6.7% in August 2025, rising to $35.1 billion from $32.89 billion a year earlier, provisional Commerce Ministry data showed on Monday. The improvement in exports, combined with a decline in imports, helped narrow the trade deficit significantly.

Export Performance in August

While exports rose on an annual basis, they eased sequentially from $37.24 billion recorded in July 2025. Imports also declined to $61.59 billion in August from $64.59 billion in the previous month. Compared with a year earlier, imports contracted 10% from $68.53 billion, reducing pressure on India’s trade balance.

The trade deficit stood at $26.49 billion in August 2025, much lower than the $35.64 billion gap in August 2024 and also narrower than the $27.35 billion deficit recorded in July 2025.

Sector-Wise Export Trends

Non-petroleum merchandise exports continued to display resilience, rising 7.35% in the April–August 2025 period compared with the same period last year. Services exports also remained steady, climbing to $97.43 billion in April–June 2025 from $88.46 billion in the year-ago period.

The Commerce Ministry noted that India’s exporters had managed to grow despite global headwinds, citing supportive policy measures such as GST reforms and production-linked incentive (PLI) schemes as key enablers.

Trade Deficit and Import Substitution

India’s overall trade deficit for April–August 2025 declined 20.76% year-on-year, reflecting both stronger exports and a reduced import bill. Officials emphasised that while the trade deficit is often seen as a weakness, it also reflects India’s strong domestic consumption demand.

To enhance self-reliance, imports have been categorised into raw materials, intermediates, and finished goods. The government is preparing a list of 100 products across sectors such as engineering, chemicals, and plastics to strengthen local manufacturing and promote Swadeshi and Aatmanirbharta.

Export Diversification and Policy Push

The United States remained India’s largest export destination, with shipments rising to $40.39 billion in April–August 2025 from $34.21 billion a year earlier. At the same time, efforts are being made to diversify India’s export base, as 50 countries currently account for 90% of outbound shipments.

Export promotion schemes continue to play a central role in the government’s trade strategy, with an emphasis on building supply chain resilience and expanding into new markets. The import substitution initiative, expected to be rolled out by the end of this month, is designed to encourage industries to create new capacities for large-volume import items.

Read More: India Hires Second US Lobbying Firm Ahead of 50% Tariff Hike on Exports

Conclusion

India’s trade data for August 2025 highlights a healthy rise in exports, a sharp fall in imports, and an improving trade deficit. With supportive reforms, targeted incentives, and a focus on diversification, the government aims to build a more competitive and resilient export sector while reducing dependence on imports.

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