The trade data put out by the DGFT for December 2025 and for the cumulative first 9 months of FY26 show a widening of the overall deficit. The overall deficit is the goods trade deficit adjusted for the surplus in the services trade account. India’s services surplus arises predominantly from export of IT services. The trade deficit has to be looked at in context of the fact that Indian exports to the US have taken a hit in recent months due to the penal tariffs imposed by Trump, but has held steady overall. 

Here is what we read from the update on trade data as of December 2025. 

1. The first section (purple shade) shows the trade in physical goods. India traditionally runs a deficit in the goods account, largely due to oil, gold, and electronics.
2. The second section (green shade) shows the trade in services. This segment reports a surplus as it is largely built on IT-related exports, which have been the engine. 
3. The overall trade deficit is the net impact of the goods trade deficit, as reduced by the surplus in the services account. It directly impacts the current account deficit. 
4. In the last few months, as Indian exports to the US have faltered, there has been an increase in exports to China, Middle East, and to Continental Europe. 

Here are some quick takeaways for investors from the trade data as of Dec-25. 

1. The merchandise trade deficit for the first nine months of FY26 is 10.9% higher than the previous year. That looks manageable, coming despite the stiff tariffs imposed on India by the US. Most of India’s imports are non-negotiable, but it must rethink gold.
2. Services trade surplus continued to build in the year on the back of a 6.5% growth in services exports in FY26 till date. However, service exports stand at 92.0% of goods exports, while services surplus covers the goods deficit to the extent of just 61.1%.
3. What is the overall situation like? Combined exports are up 4.3%, while combined imports are up 5.0%. This has resulted in a 9.2% higher overall deficit in FY26 as compared to FY25. Amidst 50% tariffs, that situation is fully understandable.
4. For the first 9 months of FY26, big export drivers were Cereals, electronic goods, cashew and dairy products. Food products still dominate the export growth. On the imports front, drivers for FY26 were Silver, Sulphur, Cotton, and Fertilizers. While silver is an unproductive addition, fertilizer imports widens the subsidy bill.

While the overall deficit is about 9.2% higher in FY26, it must be said that the 50% tariffs have not had a significant impact. With just 3 months to go, India can take solace from the fact that the CAD will not spill much beyond the previous year levels.