TRADE DEFICIT IN SEP-26 AT $30.2 BILLION

TRADE DEFICIT IN SEP-26 AT $30.2 BILLION

The merchandise trade deficit for September stood at $30.2 billion; compared to $26.9 billion in August and $31.8 billion in July 2026. While oil and electronic imports were sharply higher; gold imports were sharply lower in September 2026. Here is a snapshot of trade performance for the month of September 2026.

The trade data for September 2026 saw exports marginally higher at $44.4 billion, while the merchandise imports were up at $74.7 billion due to a spike in oil and electronics imports. While the merchandise trade deficit was up on sequential basis, it was lower on a yoy basis.

The key merchandise export drivers for September 2026 were Electronic Goods (+70.4%), Cereals (+49.9%), Handicrafts (+43.2%), Meat, Dairy, Poultry Products (+35.2%), Petroleum Products (+31.9%), Plastic & Linoleum (+24.8%), Chemicals (+24.2%), Engineering Goods (20.9%), and Cotton Yarn (+20.7%).

The major import restrictors for September 2026 were Project Goods (-86.9%), Gold (-81.3%), Silver (-49.1%), Fertilizers (-22.2%), Newsprint (-9.1%), and Iron & Steel (-5.3%).

The top 5 export destinations in September 2026 by change in absolute value yoy were United States (+48.0%), Singapore (+169.2%), Malaysia (+119.7%), Egypt (+90.1%), and People’s Republic of China (+24.1%).

The top 5 import sources in September 2026 by change in absolute value were People’s Republic of China (+31.5%), Oman (+331.8%), Russia (+25.6%), Korean Republic (+52.9%), and Singapore (+36.4%).

For H1FY26; Singapore drove export growth while China drove import growth.

In September 2026, the exports were marginally higher, but imports jumped sharply on the back of spike in imports of oil and electronic products. This is despite the sharp fall in gold imports. In the case of oil and electronic goods, the excess of dependence on China, Russia, and the Middle East; as well as rising product prices have contributed to widening the deficit on a sequential basis.

SEP-26 MERCHANDISE TRADE DEFICIT NARRPWS TO $30.2 BILLION

Merchandise Exports in September were 23.1% higher on a yoy basis at $44.4 billion. At the same time, the merchandise imports were up just 8.0%. While the overall trade in September was up 13.2% yoy, the trade deficit actually narrowed by -8.5%. Here is a quick snapshot of the merchandise trade details for September 2026.

What are the quick takeaways from a reading of the trade data for September 2026?

What caused the growth in exports in September 2026 over the previous year? Among the heavyweight export products, the support came from Meat & Dairy, Gems & Jewellery, Electronic Goods, Engineering Goods, and Petroleum Products.

What caused the rise in merchandise imports in September 2026 over the previous year? Among the heavyweight import products, upside thrust came from Crude oil, electronic goods, engineering goods, and transport equipment.

For September 2026, the services trade surplus was lower by -10.2% yoy at $16.91 billion. This was due to services imports growing faster than services exports. However, combined trade deficit of goods and services for September 2026 narrowed to $(13.3) billion; lower than $(14.2) billion in August 2026.

A key metrics is how much of goods deficit is offset by services surplus. For September 2026 that ratio fell to 56.0%; compared to 65.0% in August, and 53.0% in July 2026. The services surplus came under pressure in the month of September as the impact of AI led to lower IT spending during the month.

One area of optimism is that the trade deficit has been caused more by the price effect than volume effect; so, it should normalize along with the prices.

OVERALL TRADE DATA SIGNALS STRESS IN FY27

For (Apr-Sep), overall deficit is up 29.0% amid supply chain constraints.

Here are quick takeaways for investors from overall trade data for H1FY27.

The 29.0% higher overall deficit has been triggered by a simultaneous spike in merchandise trade deficit and a marginal improvement in the services trade surplus. The AI wave has slowed services surplus building for India.

For the first 6 months of FY27, the services trade surplus at $102.7 billion has offset almost 57.8% of the goods trade deficit of $(177.6) billion. However, services exports at $216.3 billion tapered to 83.2% of merchandise exports.

The CAD story in FY27 is going to be more complicated than FY26, as some of the biggest heads of imports; like crude oil, electronic goods, and fertilizers are seeing a sharp spike. India has restrained the imports of gold, but that is just a small part of the story. The bigger concern is the impact that global price hikes and weak rupee can have on the trade gap; without proportionate benefits on exports.