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India’s Trade Deficit Shrinks
Context:
India’s trade deficit contracted sharply to $9.9 billion in August 2025 due to higher exports and reduced imports.
Trade Deficit Contraction
- India’s trade deficit in August 2025 fell to $9.9 billion, down 54% from $21.7 billion in August 2024.
- The reduction was driven by higher merchandise and services exports and a decline in merchandise imports.
Exports Performance
- Total exports: $69.2 billion, up 9.3% from last year.
- Merchandise exports: $35.1 billion, growth of 6.7% over August 2024.
- Services exports: $34.1 billion, up from $30.4 billion last year.
- Notable export partner:S. exports rose to $6.86 billion, despite 25-50% tariffs imposed on Indian goods.
Imports Performance
- Total imports: $79 billion, down 7% from $85 billion last year.
- Merchandise imports: $61.6 billion, contraction of 10.1%.
- Services imports: increased marginally to $17.45 billion.
- Reduced import demand, particularly for merchandise, helped narrow the deficit.
Cumulative Trade Balance
- April–August 2025 trade deficit: $41.4 billion, 20.1% lower than April–August 2024.
- Indicates resilient export performance and partial import moderation, contributing to macroeconomic stability.
Policy Implications
- Reflects effective government trade policies, export incentives, and resilience of India’s services sector.
- Shows global competitiveness despite trade uncertainties and tariffs.
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