India’s widening goods trade deficit has brought the country’s trade agreements into sharper focus, as policymakers look to strengthen export growth, expand market access and improve the balance of merchandise trade.
Trade pacts with key economies are expected to play an important role in supporting Indian exporters by reducing tariff barriers, improving access to overseas markets and enhancing the competitiveness of domestic products. Sectors such as engineering goods, textiles, pharmaceuticals, agricultural products, chemicals and gems and jewellery could benefit from improved trading conditions.
India has been pursuing trade agreements with several major partners to diversify export destinations and reduce dependence on a limited number of markets. Such agreements can provide exporters with more predictable tariff structures and clearer rules for doing business internationally.
However, trade agreements alone may not be sufficient to narrow the deficit. The outcome will also depend on export demand, manufacturing competitiveness, logistics costs, import requirements and global commodity prices. India’s reliance on imports of crude oil, electronics, machinery and other industrial inputs remains an important factor influencing the merchandise trade balance.
The merchandise trade deficit rose to US$30.21 billion in September 2026, compared with US$26.86 billion in August. Goods exports increased 23.04% year-on-year to US$44.40 billion, while imports climbed to US$74.61 billion.
India’s trade strategy includes expanding access to international markets through agreements with partners such as the United Kingdom and New Zealand, alongside ongoing negotiations with the European Union and the United States. These efforts aim to create new opportunities for Indian businesses and diversify export destinations.
For exporters, the key challenge will be converting improved market access into sustained export growth. Strengthening domestic manufacturing, improving supply-chain efficiency and reducing logistics costs will also be important in making Indian products more competitive globally.
Although the widening monthly deficit highlights continued pressure from imports, strong export performance across several sectors offers opportunities to improve India’s trade position. The effectiveness of new trade agreements will depend on how successfully Indian businesses use them to expand overseas sales.