NextFin news, New Delhi – On Monday, September 15, 2025, India’s Commerce Ministry released data showing that the country’s merchandise trade deficit narrowed to $26.49 billion in August 2025, down from $27.35 billion in July 2025. This improvement occurred despite the imposition of 50% US tariffs on Indian imports, which took effect recently.
Exports in August 2025 rose 6.7% year-on-year to $35.1 billion, driven by sectors including gems and jewellery, engineering, electronics, and petroleum products. However, exports declined slightly from $37.24 billion in July 2025. Imports contracted by 10.1% to $61.59 billion from $64.59 billion in July 2025, contributing to the narrowing trade deficit.
Commerce Secretary Sunil Barthwal stated, "Despite global uncertainties and trade policy uncertainties, Indian exporters have done well. It shows that the government’s policy has paid off." Commerce and Industry Minister Piyush Goyal reaffirmed the government’s commitment to supporting exporters amid shifting tariff regimes and recently engaged with export promotion councils and industry groups to strategize forward.
In response to the challenges posed by the US tariffs, the Indian government extended the export obligation period under the Advance Authorization scheme for products subject to mandatory Quality Control Orders from six months to 18 months. This extension, issued by the Directorate General of Foreign Trade at the request of the Department of Chemicals and Petrochemicals, aims to provide exporters, particularly in the chemical and petrochemical sectors, with greater flexibility in compliance management while maintaining global competitiveness.
The US tariffs, linked to India’s ongoing purchases of Russian oil, have imposed one of the highest penalty rates on Indian goods. The chemical and petrochemical sector, which contributed $46.4 billion or 10.6% of India’s total exports in fiscal year 2024–25, is expected to benefit significantly from the government’s relief measures.
The narrowing of the trade deficit and the resilience of exports amid these tariffs reflect ongoing adjustments in India’s trade dynamics and government policy interventions to support exporters in a challenging global trade environment.
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