A cursory glance at the cumulative trade numbers up to November 2025 (first 8 months of FY26) would tell us that things are on track. The cumulative overall deficit is just about 2.33% higher over the same period last year. However, that may be slightly misleading. In the previous fiscal year, the last few months were when the deficit was really trimmed down. In contrast, the impact of tariffs is just starting to show, and unless there is a trade deal with the US very quickly, the trade deficit numbers could get much wider. 

1. The light purple shade above shows the exports, imports and the trade deficit in merchandise goods. India runs a deficit on the merchandise trade account. 
2. The light orange shade above shows the exports, imports and the trade deficit in services. India runs a major surplus on the services trade account. 
3. The light green shaded data pertains to the overall deficit, which combines the trade in the merchandise goods and the trade in services with other countries. 

What We Read From Data, And Why We Must Be Cautious? 

Here is what we can quickly infer from the trade data for fiscal FY26 till date. 

1.  For the first 8 months of FY26, the overall trade volumes at $1.21 trillion is quite impressive. Based on this extrapolation, we should see total trade of over $1.80 trillion by the end of the financial year in March 2026.
2. Let us talk about the merchandise trade deficit for the first 8 months of FY26. At $223 billion, it is 9.7% higher than last year. However, the export pressures and the almost inelastic imports of oil, gold, and electronic components will put pressure.
3. Let us turn to the services surplus as of November 2025. At $134 billion, the services surplus is 15.3% higher on a yoy basis. Unlike the export of goods, that have been hit by tariffs, the IT exports and the GCC revenues have actually grown in this period.
4. The big question is the extent to which the services surplus offsets the goods deficit. In FY26, the offset ratio of surplus to deficit was 60.1%, compared to 57.2% last year. Also
5. , the service export ratio this year is up at 92.5%, compared to 87.3% in FY25. Let us finally move to the total deficit for the current fiscal (8 months period). That stands at $89.0 billion compared to $87.0 billion last year, just about 2.3% higher on a yoy basis. However, the full impact of the tariffs started manifesting only from October, and the trade deal between India and the US continues to look elusive.

In terms of current account deficit (CAD) for FY26, H1 data looks under control. The problem will arise if the gap between the goods deficit and the services surplus widens in H2FY26; or if the NRI flows slow due to a weak rupee. That could be a CAD challenge!