August Trade Deficit Narrows To $26.5 Billion As Exports Held Firm Before Tariff Impact

India's trade deficit stood at $26.5 billion in August, compared to $27.35 billion in the preceding month, the Ministry of Commerce said in a press briefing on Monday.

The country's merchandise exports have edged up by 6.7% to $35.1 billion, while merchandise imports fell by 10.1% to $61.6 billion. On a sequential basis, while exports fell 5.7%, imports fell by 4.6%.

To be sure, US President Donald Trump announced additional tariffs on India in early August, with the imposition of these tariffs starting Aug. 27. This took the cumulative levies on Indian exports to 50%.

Special Secretary Rajesh Agrawal said that the team from the US, including the chief negotiator are set to land in India for trade talks tonight, with the talks expected to resume on Tuesday.

Despite global trade policy uncertainties, India’s exporters have done "extremely well", Commerce Secretary Sunil Barthwal told reporters.

Government policies have played out well, he said, adding that India’s exports are quite diversified now, with the government and exporters working on further diversification.

The focus is also on reducing dependency on certain geographies to avoid supply chain disruptions, he indicated. To be sure, the US remained India's top export destination, with merchandise exports rising to $40.4 billion between April-August this year, compared to $34.2 billion in the corresponding period last year.

Tentative data for services showed a rise in both exports and imports. While services exports rose by 12.2% to $34.1 billion, imports rose by 6% to $17.5 billion. On an aggregate basis, exports rose by 9.3%, while imports fell by 7%.