India trade deficit narrows year-on-year as September exports jump 23%

India's merchandise exports surged 23.04 per cent year-on-year in September to $44.40 billion, underscoring the resilience of the nation's manufacturing sector amidst ongoing global energy disruptions and supply chain pressures. Ministry of Commerce and Industry figures released on Thursday showed overall exports, combining merchandise and services, expanded 10.99 per cent to $80.75 billion.

The year-on-year merchandise trade deficit narrowed to $30.21 billion from $33 billion recorded in September last year. Driven by sustained domestic economic activity and higher energy costs, imports rose to $74.61 billion from $70.67 billion in August. However, strong export performance kept the overall trade deficit across both goods and services at $13.30 billion, down from $14.17 billion a year earlier.

Record quarterly performance

Export momentum accelerated significantly through the second quarter of the current financial year. Overall exports reached $242.6 billion between July and September—the highest figure ever recorded for a second quarter—growing 15.84 per cent compared with 11.84 per cent in the first quarter.

Commerce Secretary Rajesh Agrawal attributed the gains to broad-based competitive strength across key industrial sectors, including electronic goods, petroleum products, engineering goods, chemicals, poultry, and handicrafts.

Expanding global market access

India continues to consolidate its footprint across major international trade destinations. The United States remained India's top merchandise export market, with shipments rising 11.1 per cent to $50.81 billion during the April-September period, compared with $45.73 billion in the corresponding period last year.

Negotiations for a bilateral trade agreement with the US are advancing rapidly. Agrawal said both sides were moving towards concluding the deal, which aims to secure preferential market access for Indian exporters as the broader US tariff structure is formalised.

Parallel market diversification efforts are also bearing fruit. India's trade agreement with New Zealand is scheduled to take effect next week, building on the trade pact already operational with Britain and ongoing negotiations with the European Union.

Automobile shipments provided additional export strength, rising 22.5 per cent year-on-year in September to 684,481 units, according to data from the Society of Indian Automobile Manufacturers. Two-wheeler exports led the sector with a 26.8 per cent jump to 544,797 units. Meanwhile, gold imports fell 27.32 per cent during the first half of the financial year to $19.27 billion, helping moderate overall import growth.