India's September merchandise trade deficit widens to $30.21 billion

In September, India's merchandise trade deficit expanded to $30.21 billion, up from $26.86 billion in the previous month, as imports increased faster than exports, according to government data released on Thursday. Economists had anticipated the merchandise trade deficit to reach $30.4 billion, as per a Reuters poll. Exports of physical goods climbed to $44.40 billion in September, from $43.81 billion in August, while imports rose to $74.61 billion, up from $70.67 billion in the same period last year.

The widening goods deficit occurred amid an escalating US-Iran conflict, which has further disrupted oil supplies, contributing to India's inflation risks. As the world's third-largest oil importer and Asia's third-largest economy, these disruptions have put pressure on prices. Brent crude futures have remained above $100 a barrel due to the ongoing Iran war, with attacks around the Strait of Hormuz surging in recent days.

Iran has claimed it is intensifying strikes in response to the US blockade of its ports and the imposition of stricter sanctions introduced in the previous month. In an effort to counter inflationary pressures, India's central bank raised interest rates earlier this month and has since implemented several measures to support the rupee.

Broad-based export growth in September, spanning various sectors, including petroleum products, meat, dairy, poultry, electronic goods, handicrafts, and engineering goods, was highlighted by Rajesh Agrawal, trade secretary, during a briefing on the trade figures. India is striving to diversify its export markets, with a trade deal with New Zealand set to commence next week, and an agreement with Britain already in place.

A broader agreement with the European Union is nearing implementation. In addition to export growth, automobile exports and resilient services shipments contributed to India's overall export performance. In September 2026, automobile exports surged 22.5% year-on-year to 684,481 vehicles, primarily driven by a 26.8% jump in two-wheeler shipments to 544,797 units, as reported by the Society of Indian Automobile Manufacturers (SIAM) data released on Thursday.

However, passenger vehicle exports declined by 2.2%. Services exports were recorded at $36.35 billion, while imports amounted to $19.44 billion, as per trade ministry estimates. Gold imports decreased to $1.8 billion from $2.3 billion in August, when they had notably increased due to inventory restocking ahead of the festive season.

Data also showed that gold imports for the first six months of the fiscal year 2026/27 fell by 27.32% year-on-year to $19.27 billion. The United States remained the primary destination for Indian exports, with goods shipments amounting to $50.81 billion from April to September, up from $45.82 billion the previous year.