India’s merchandise exports rose by 6.8% year-on-year (YoY) to $36.4 billion in September 2025, maintaining the pace of growth seen in the previous month. Post the onset of 50% tariffs, India’s exports to the US fell by ~12% YoY in September 2025, after the sharp ~23% expansion in 8M CY2025. However, this was compensated by higher shipments to the non-US regions (+11%, including China, Bangladesh and the UAE) in the month. Simultaneously, imports accelerated to an all-time high $68.5 billion in September 2025, amid a spike in gold imports, which pushed up the merchandise trade deficit (MTD) to a 13-month high of $32.1 billion. Overall, with the average monthly trade deficit rising sharply to $28.7 billion in Q2 FY2026 from $22.9 billion in Q1, ICRA expects India’s current account deficit (CAD) to enlarge to $17-18 billion in Q2 FY2026 (1.8% of GDP) from the low $2.4 billion in Q1 FY2026 (0.2% of GDP).

• Growth in India’s merchandise imports outpaced that in exports in September 2025: India’s merchandise exports rose by 6.8% YoY to $36.4 billion in September 2025, supported by shipments of petroleum products, electronic goods (exempted from US tariffs) and rice. However, the exports of textiles (-10%), cotton yarn/fabrics (-12%), and leather products (-6%) were affected in September 2025 owing to the US tariffs. In contrast, imports soared by 16.7% YoY to an all-time high $68.5 billion in September 2025, driven by gold, fertilisers, electronic goods, and edible oils.
• Exports to the US contracted by ~12% YoY in September 2025, post imposition of 50% tariffs: The exports to the US have fallen by ~20% MoM and ~12% YoY in September 2025 as the steep tariff and penalty came into full effect. However, this was compensated by higher shipments to non-US regions (+10.9% YoY), including China (+34% YoY), Bangladesh (+23%), Saudi Arabia (+14%), and the UAE (+24%), supporting the overall exports in the month.

Source: Ministry of Commerce and Industry, GoI; CMIE; ICRA Research