India Trade Gap Narrows Even as Exporters Brace for Tariffs
India’s trade deficit narrowed in August, even as exporters brace for pain from President Donald Trump’s 50% tariffs, which threaten to hit several labor-intensive sectors.
The gap between exports and imports stood at $26.49 billion last month, data released by the Ministry of Commerce and Industry showed Monday, compared with a $24.8 billion deficit projected by economists in a Bloomberg survey. The trade deficit had widened to an eight-month high of $27.35 billion in July.
Inbound shipments fell 10.1% in August to $61.59 billion from a year earlier, while outbound shipments stood at $35.1 billion, up 6.7%, according to the data.
This is the first trade data since the US slapped a 25% tariff on Indian goods on Aug. 7, doubling it 20 days later to punish New Delhi for buying Russian oil. The levies are among the highest in the world and threaten to make Indian exports uncompetitive against regional rivals like Vietnam and Bangladesh.
Still, India-US relations showed some signs of improvement last week as Trump and Prime Minister Narendra Modi pledged to resume trade talks. A trade team from the US will be in New Delhi Monday night, India’s chief negotiator Rajesh Agarwal told reporters at a briefing.
New Delhi is also pursuing a free trade pact with the EU with heightened urgency, with the next round of talks set for Oct. 6–10. India is working to reduce its dependence on certain geographies to limit the impact of supply chain disruptions, Commerce Secretary Sunil Barthwal said.
The US is India’s top export market and the tariffs are likely to hit labor-intensive sectors such as textiles and jewelry hardest. Indian exporters accelerated shipments to the US before the tariffs hit. Outbound shipments reached $40.39 billion between April and August, up from $34.21 billion a year earlier, the data showed.
The government has also identified about 100 products where boosting domestic manufacturing can cut reliance on imports, Barthwal added.
