New Delhi [India], September 16 : India's merchandise trade deficit remained elevated at USD 26.5 billion in August 2025, despite narrowing modestly from USD 27.4 billion in July, according to a report by Nuvama Institutional Equities.
The firm noted that while the headline number improved marginally, the underlying trends show continued stress in core trade segments.
The ex-oil trade deficit widened further to USD 17.7 billion in August from USD 16.1 billion a month earlier. Similarly, the deficit excluding oil and gold also stayed high at USD 14.6 billion. Gold imports nearly doubled the deficit in that segment to USD 3.1 billion, while the oil deficit eased to USD 8.8 billion from USD 11.2 billion in July.
Nuvama highlighted that electronics imports continued to weigh heavily, with the trade deficit in this category rising to USD 6.8 billion in August compared with USD 6.1 billion in July. "Other sectors registered broadly stable deficit levels, but the drag from electronics is notable," the report said.
On the exports front, recovery remained muted. Merchandise exports slowed to 6.7 per cent year-on-year (YoY) in August from 7.3 per cent in July. However, the trend growth improved to 4.6 per cent YoY in August from 1.3 per cent in July, supported by a low base.
Core exports, excluding oil held steady at 7.8 per cent YoY. Electronics exports continued their robust momentum, surging 36 per cent YoY on a three-month moving average basis.
In contrast, labour-intensive sectors such as textiles and ready-made garments (RMG) lost traction, with textile exports nearly flat at 0.8 per cent and RMG slowing to 1 per cent in August from 6 per cent in July.
Imports, on the other hand, witnessed a sharp contraction as domestic demand slowed. Merchandise imports fell by 10.1 per cent (YoY) in August, compared with an 8.6 per cent growth in July. Even on a three-month moving average basis, imports weakened to -2.1 per cent (YoY) in August from 1.1 per cent in July. Core imports excluding oil dropped 3 per cent (YoY), reflecting a broad-based slowdown. Machinery goods imports fell to 10 per cent in August from 17 per cent in July, while electronics imports decelerated to 10 per cent from 15 per cent.
Nuvama cautioned that tariffs impact could weigh on export performance in the coming months. "The tariff impact is likely to weigh on exports, clouding the near-term outlook. At the same time, subdued domestic demand should help keep imports under check. Accordingly, we reckon the trade deficit shall remain steady or narrow marginally in the coming months," the report noted.