India’s merchandise trade deficit surged to $32.15 billion in September 2025, the highest level in 11 months, according to data from the Commerce Ministry released on October 15. The sharp widening gap was driven by a faster rise in imports than exports, compounded by recent US tariff hikes on several key Indian goods. The development comes just ahead of crucial trade negotiations with Washington, where India is expected to boost US energy imports and defend its Russian oil purchases amid growing geopolitical scrutiny.
Breakdown of September Trade Performance
Exports and Imports
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Exports rose modestly to $36.38 billion in September, up from $35.10 billion in August, despite the impact of higher US tariffs.
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Sectors most affected by the tariff increases include textiles, shrimp, and gems & jewellery, which are major contributors to India’s export basket.
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Imports, however, saw a sharp jump to $68.53 billion, compared with $61.59 billion in August.
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The resulting $32.15 billion trade deficit far exceeded the $25.13 billion median estimate from a Reuters poll of economists.
US Tariff Dispute
The deficit expansion follows President Donald Trump’s late-August 2025 decision to double tariffs on several Indian products to 50%, targeting industries where India holds global competitiveness.
The move is part of Washington’s broader strategy to narrow its trade imbalance with India. Despite this, the US remains India’s largest trading partner in goods, and both sides are actively seeking resolutions.
During the upcoming talks, India is expected to propose measures to increase imports of US liquefied natural gas (LNG) and crude oil, aiming to offset the imbalance created by tariff pressures.
Russian Oil Purchases Under Scrutiny
India’s continued purchase of discounted Russian oil remains a key point of contention in its discussions with Washington.
New Delhi is likely to defend its stance, emphasizing energy security and price stability in a volatile global market, especially amid ongoing geopolitical tensions.
Half-Year Trade Overview (April–September FY26)
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Exports to the US rose 13%, from $40.42 billion to $45.82 billion, even amid tariff-related challenges.
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Imports from the US also increased from $23.47 billion to $25.59 billion, signaling stronger bilateral trade flows.
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The data suggests that while short-term disruptions such as tariffs create friction, the long-term trade relationship remains on a growth trajectory, driven by demand and supply chain diversification.
Services Trade Balances
the Gap
India’s services sector continued to post a strong surplus, partly offsetting the merchandise trade gap.
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Services exports: $30.82 billion
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Services imports: $15.29 billion
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Net services surplus: $15.53 billion
When combined with the goods trade figures, the overall goods and services deficit becomes more moderate, softening the impact of the merchandise shortfall.
Key Highlights
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September trade deficit: $32.15 billion (11-month high)
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Exports: $36.38 billion | Imports: $68.53 billion
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US tariffs: Increased to 50% on key Indian goods such as shrimp and textiles
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Upcoming focus: Energy imports and Russian oil policy in US-India trade talks
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Services surplus: $15.53 billion in September
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