India trade deficit eases to $26.86 billion in Aug as exports jump 26%

India's trade deficit eased to $26.86 billion in August from $27.22 billion a year ago and $31.98 billion recorded in July, data released by the Department of Commerce showed on Tuesday.

The trade deficit eased as the growth in goods exports in August outpaced the rise in merchandise imports by a significant margin. Exports jumped 26 per cent year-on-year (Y-o-Y) to $43.81 billion in the month, while imports rose 14 per cent Y-o-Y to $70.67 billion.

Cumulatively, goods exports were $215.91 billion in April-August, up nearly 18 per cent Y-o-Y. Imports were also 18 per cent higher Y-o-Y at $363 billion in the first five months of the current financial year. As such, the trade deficit stood at $147 billion in the five-month period.

The strong growth in goods exports has also increased their contribution to gross domestic product (GDP) after the share of exports recorded a consistent decline in the last three financial years. Exports accounted for 14 per cent of GDP in the first quarter of 2025-26 (FY26), according to the latest data available.

Following a slowdown in global demand in FY24 and FY25, and steep US tariffs on Indian goods in FY26, the share of exports in GDP fell to 11.3 per cent in FY26 from 11.7 per cent in FY25 and 12.5 per cent in FY24. At 14 per cent of GDP in Q1FY27, the share of exports has recovered to the level seen in FY23 — a year when annual goods exports were at a record high.