India’s merchandise trade deficit narrowed in August to $26.49 billion from $27.35 billion in July, as a drop in exports after U.S. President Donald Trump hiked tariffs on Indian goods was offset by slowing imports.
The U.S. imposed an additional 25% tariff on Indian goods from August 27 over New Delhi’s continued purchases of Russian oil, bringing total levies on Indian exports to 50% – among the highest for any U.S. trading partner.
Trade talks between India and the U.S. have slowed since the imposition of tariffs, but negotiators of the two sides will meet on Tuesday, Indian government officials said.
Total goods exports fell to a nine-month low of $35.10 billion in August from $37.24 billion in July. Exports to the U.S. fell to $6.86 billion in August from $8.01 billion in July, while its shipments to the U.S. rose in the April-August period to $40.39 billion.
Total goods imports fell to $61.59 billion from $64.59 billion, the data released by the commerce ministry showed.
India’s merchandise trade deficit in August was higher than economists’ forecast of $25.13 billion in a Reuters poll.
The government estimated services exports in August at $34.06 billion and imports at $17.45 billion, suggesting a total goods and services trade deficit at $9.88 billion.
The central bank releases monthly services trade data after a one-month lag, following government estimates.
Officials said India’s merchandise and services exports rose in August, led by engineering and electronics goods.
“August exports growth is driven by good performance of electronics, engineering, gems and jewellery, besides petroleum and pharma exports,” Sunil Bharthwal, India’s commerce secretary, said.
Bharthwal said the government’s measures to encourage diversification of exports to different markets have paid off.
Indian producers are trying to export more to markets in the Middle East, Africa and other countries to partly offset the impact of Trump’s tariffs.