India’s Trade Deficit Hits $32.15 Billion in September 2025

India’s merchandise trade deficit widened sharply to $32.15 billion in September 2025, marking an 11-month high, according to data released by the Commerce Ministry on October 15. This surge, significantly above expectations, reflects a faster rise in imports than exports—compounded by recent US tariff hikes on key Indian goods. This development comes just days before critical trade negotiations with Washington, where India is expected to increase its US energy imports and defend its Russian oil purchases amid growing geopolitical scrutiny.

Breakdown of September Trade Figures

Merchandise Exports and Imports

• India’s exports in September stood at $36.38 billion, rising modestly from $35.10 billion in August despite the negative impact of higher US tariffs.
• Key sectors affected by the US policy changes include textiles, shrimp, and gems & jewellery, which traditionally contribute significantly to India’s export basket.
• On the other hand, merchandise imports jumped to $68.53 billion, a steep rise from $61.59 billion in August.
• The widening gap between exports and imports led to the $32.15 billion deficit, far above the $25.13 billion median forecast by economists in a Reuters poll.

Tariff Tensions with the US

• The sharp deficit expansion follows President Donald Trump’s decision in late August 2025 to double tariffs on several Indian goods to 50%, targeting sectors where India has strong global competitiveness.
• These tariff hikes are seen as part of Washington’s broader efforts to narrow its trade deficit with India.
• However, India remains the United States’ largest trading partner in goods, and both countries are actively working to resolve tensions.
• In upcoming trade talks this week, India is likely to propose a roadmap to increase imports of US energy products, especially LNG and crude oil, to offset the imbalance.

Russian Oil Purchases

• One of the key sticking points in US-India discussions remains India’s continued purchase of discounted Russian oil, which has raised concerns in Washington amid ongoing geopolitical tensions.
• India is expected to defend its position, arguing for energy security and price stability in a volatile global oil market.

Half-Year Trade Snapshot: April–September FY26

• In the first six months of the fiscal year beginning April 2025, India’s exports to the US rose by over 13%—from $40.42 billion to $45.82 billion—despite rising trade barriers.
• Imports from the US also grew from $23.47 billion to $25.59 billion, reflecting stronger bilateral flows despite political headwinds.
• This suggests that while short-term disruptions like tariffs create friction, the long-term trade trajectory remains upward, fueled by strong consumer demand and supply chain diversification.

Services Trade and Net Impact

• India’s services sector continued to post a strong surplus, helping balance the merchandise deficit.
• In September, services exports were estimated at $30.82 billion, while services imports stood at $15.29 billion, resulting in a net services surplus of $15.53 billion.
• When combined with the merchandise trade data, this brings the total goods and services deficit to a more moderate level—softening the impact of the large goods trade gap.

Key facts

• Trade deficit in September: $32.15 billion, highest in 11 months
• Exports: $36.38 billion | Imports: $68.53 billion
• US tariffs raised to 50% on Indian goods like shrimp and textiles
• Upcoming US-India trade talks to focus on energy imports and Russian oil
• Services surplus in September: $15.53 billion