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Even as India’s goods exports to the United States registered a sharp fall of 12 per cent in September (year on year), the total exports registered a 6.74 per cent growth, buttressed by gains in the UAE and Chinese markets. However, a sharp surge in gold, silver and fertiliser imports widened the trade deficit to $31.15 billion, the highest in over a year, according to data released by the Commerce and Industry Ministry on Wednesday.
The data for September provides a first look at the impact of the 50 per cent US tariffs, which came into effect in full on August 27.
The data showed a 24.33 per cent surge in exports to the UAE, and a 34.18 per cent increase in exports to China. However, imports from the UAE and China also jumped by 16.35 per cent and 32.83 per cent, respectively.
The total exports grew 6.74 per cent to $36.38 billion in September, compared to $34.08 billion in the same month last year. Imports, meanwhile, surged 16.6 per cent to $68.53 billion, against $58.74 billion a year earlier, as the price of precious metals hit record highs last month. Services exports in the month slipped 5 per cent to $30.82 billion, compared to $32.60 billion in the corresponding period last year, according to the ministry’s estimates.
“It has been a turbulent year for trade that has resulted in a recalibration of supply chains. The positive aspect is that, in the first six months of the current financial year, India’s goods and services exports have increased compared to the same period in the previous financial year. Even the trade deficit is lower,” Commerce Secretary Rajesh Agrawal said.
He said that the industry had managed the turbulence and maintained supply chains “at cost”, adding that the impact of the US tariffs on exports would be evident in September and October, and the Commerce Ministry would assess the commodity-wise data to understand the effect.
Gold and fertilisers contributed most to the sharp surge in imports in September. While gold imports more than doubled to $9.6 billion, registering a 106.93 per cent growth, fertiliser imports rose 202 per cent to $2.3 billion. Import of petroleum products, meanwhile, slipped 5.85 per cent to $14.03 billion.The data also showed that imports from Russia declined by 16.69 per cent, while imports from the US increased by 11.78 per cent.
Commodity-wise data showed that the impact on labour-intensive sectors has begun to show. Export of textiles, jute, carpet and hadicrafts dipped between 5 to 13 per cent. However, exports of electronic goods surged 58 per cent. In a likely surge in iron ore exports to China, the commodity showed a 60 per cent increase.
Responding to a question on whether India could step up oil imports from the US to strike a deal, Agrawal said that in the past seven to eight years, energy purchases from the US, largely crude oil, have fallen from $25 billion to around $12-13 billion. “So, there is a headroom of around $12-15 billion, which we can purchase without worrying about the configuration of refineries,” he said.
“There is a bilateral commitment, and in the discussions we are in, we have indicated very positively that India, as a country, would like to diversify its portfolio as far as energy imports are concerned. That’s the best strategy for a big buyer like India,” he said.
Agrawal said that Indian negotiators are already in the US exploring a win-win solution between the two sides, adding that the current round of talks is not a formal one due to the US government shutdown.
S C Ralhan, president of the Federation of Indian Export Organisations (FIEO), said that consistent growth in exports, despite global headwinds, underscores the efforts of Indian exporters and their growing competitiveness on the world stage.
“At the same time, the increase in imports calls for a renewed focus on building domestic manufacturing capabilities in critical sectors such as electronics, machinery and intermediate goods,” Ralhan said, urging the government to take bold steps towards import substitution by encouraging local production.
A survey report released by the Confederation of Indian Textile Industry (CITI) on Monday said that about a third of respondents reported their turnover had been reduced by more than 50 per cent, as the majority of US buyers are seeking discounts or have resorted to cancelling orders.
“About 85 per cent of the respondents have reported an inventory build-up due to reduced orders, and about two-thirds have had to offer discounts — the majority to the tune of 25 per cent — to remain competitive,” the survey said.
The US is the top export destination for India’s textile and apparel products, accounting for about 28 per cent of India’s global T&A exports.
On July 31, US President Donald Trump imposed 25 per cent reciprocal tariffs on India using powers under the International Emergency Economic Powers Act (IEEPA), and on August 6, he signed an executive order imposing an additional 25 per cent penal tariff, citing India’s imports of Russian oil. These additional tariffs came into effect on August 27.
India exported goods worth $87 billion to the US in 2024–25. The Finance Ministry has estimated that the US tariffs would affect 55 per cent of these exports.
