India's merchandise trade deficit narrowed to a 5-month low of USD 26.9 bn in Aug-26 from USD 32.0 bn in Jul-26
Download ReportQuantEco Research | Merchandise Trade | Aug-26 | Strong exports cushion the deficit
India's merchandise trade deficit narrowed to a 5-month low of USD 26.9 bn in Aug-26 from USD 32.0 bn in Jul-26, as imports contracted more steeply than exports on a sequential basis. Encouragingly, export momentum remained strong, with merchandise exports rising 26.1% YoY — the fastest pace in 50 months. The strength was also broad-based, with 12 of the 14 key export categories and 12 of the 15 import categories recording annual gains. On a FYTD basis, core exports grew by a healthy 15.2% YoY, underscoring the resilience of trade despite a challenging geopolitical backdrop. While India has posted a strong FYTD export performance, it has yet to gain in global export market share. On the imports front, we see early signs of pressures building up from elevated commodity prices on account of the re-escalation of the Middle East conflict along with renewed tariff uncertainty. We project India’s FY27 current account deficit at 1.1% of GDP (USD 45 bn), with commodity prices remaining the key swing factor. On the financing front, India’s policymakers’-led steps have garnered an unprecedented quantum of forex inflows by granting tax and regulatory support. We maintain our FY27 BoP projection of USD 120 bn surplus.