India’s Merchandise Trade And Policy Push

India’s foreign trade forms an integral part of its economic growth story, influencing GDP, employment, and currency stability. In August 2025, India posted higher exports alongside reduced imports, narrowing the trade deficit significantly. Commerce Secretary Sunil Barthwal emphasized that despite global uncertainties, Indian exporters are performing well, supported by government reforms and targeted trade strategies.

Key August Trade Numbers

• Exports: $35.10 billion, up 6.7% year-on-year (vs $32.89 billion).
• Imports: $69.59 billion, down 10% year-on-year (vs $77.31 billion).
• Trade Deficit: $26.59 billion, down 25.7% (vs $35.64 billion).

Commerce Secretary Sunil Barthwal stated that the narrowing trade deficit is a positive sign, indicating both improved export competitiveness and rationalized imports. This balance strengthens India’s external sector resilience.

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Exports Powered By Reforms And Diversification

Exports grew by 6.7% in August, driven by petroleum products, engineering goods, chemicals, and pharmaceuticals. Barthwal highlighted that GST reforms and the Production Linked Incentive (PLI) scheme have significantly enhanced India’s export competitiveness. These initiatives have reduced compliance costs, streamlined logistics, and encouraged manufacturing expansion.

Exports are also becoming more diversified, both in terms of products and geographies. By reducing dependence on a limited set of markets, India has been able to withstand global supply chain disruptions and continue expanding its trade reach.

Imports Decline And Domestic Capacity Focus

Imports fell by 10% in August, largely due to lower oil and gold shipments. While this reflects a moderation in demand, it also aligns with the government’s strategy to promote domestic production. Barthwal confirmed that the government has identified 100 products with high import volumes and is currently assessing domestic capacity utilization. The aim is to reduce dependence on imports in these categories by boosting local manufacturing.

This approach not only strengthens the “Make in India” initiative but also reduces exposure to volatile global supply chains.

Mission-Oriented Policy Frameworks

The Commerce Secretary also noted that India is strengthening its missions abroad, with specific policy frameworks being developed for each mission. This strategy involves tailoring export promotion policies to the strengths of particular regions, ensuring that Indian exporters can effectively tap global opportunities.

Such mission-wise initiatives reflect a forward-looking approach that balances immediate trade needs with long-term structural competitiveness.

Resilience Amid Global Uncertainties

Global trade continues to face uncertainties stemming from policy shifts, geopolitical tensions, and supply chain realignments. Yet India’s export growth in August underscores its resilience. By diversifying export markets and strengthening domestic production, India is reducing vulnerability to external shocks. GST reforms, PLI incentives, and targeted government interventions are further boosting competitiveness.

This resilience positions India to continue benefiting from global demand, even as world trade volumes slow down.

April–August Trade Trend

Between April and August, India’s cumulative trade deficit has narrowed compared to last year. This period has witnessed stronger export growth and lower imports, indicating improving competitiveness. With structural reforms supporting supply-side efficiencies, India’s trade trajectory is expected to remain steady in the coming months.

The sustained momentum will depend on global commodity prices, exchange rate stability, and continued policy support to exporters.

Investor takeaway

India’s August trade performance sends a strong signal of economic resilience. Rising exports, supported by GST reforms and the PLI scheme, highlight a shift toward competitive, diversified trade. Falling imports and focus on domestic production also improve macroeconomic stability. Investors should keep an eye on export-oriented industries such as engineering, pharma, IT-enabled logistics, and chemicals, which stand to benefit from this momentum.

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Disclaimer: This article is meant purely for informational purposes and should not be taken as investment advice. Readers must carry out their own due diligence or consult a SEBI-registered investment advisor before making investment decisions.