India's merchandise exports rose 26 per cent year-on-year in August to $43.81 billion, the highest for any August on record, according to government data released on Tuesday. The growth, which outpaced the 14 per cent rise in imports to $70.67 billion, helped narrow the country's trade deficit to a five-month low of $26.86 billion.

Commerce Secretary Rajesh Agarwal told reporters that the widening gap between export and import growth was a positive development, driven by broad-based demand from major trading partners including the United States, the European Union, BRICS nations and other emerging economies. He noted that while global conditions remained uncertain, the latest figures reflected underlying competitiveness of Indian industry.

The August performance built on a record first quarter, when goods exports accounted for 14 per cent of GDP, recovering to the level seen in FY23. The share had dipped to 11.3 per cent in FY26 from 11.7 per cent in FY25 and 12.5 per cent in FY24, following a slowdown in global demand in the previous two fiscals and the impact of steep US tariffs. Agarwal attributed the recovery to "remarkable" export resilience and adaptability of Indian businesses.

Imports in August rose more slowly than exports, with data showing a 14.1 per cent increase to $70.76 billion. Imports from the UAE and Saudi Arabia were lower during the first five months of FY27, a factor that Commerce Secretary attributed to reduced crude oil prices and softer demand for gold, which declined in August. The trade deficit for April-August stood at $147 billion, with imports rising 18 per cent to $363 billion.

Engineering goods, petroleum products, chemicals and textiles were cited by the Commerce Secretary as key drivers, alongside demand from the US, the EU and BRICS countries. The United States remained India's largest export destination, with demand from that market and Europe helping to offset a slowdown in trade with West Asia, which the government said "suffered" in the first half of the year.

Agarwal said goods import growth was lower than export growth, calling the trend a "positive development" for the economy. He added that the latest figures suggest export growth is not only value-led but also reflects "remarkable volume growth."

The first set of 25 per cent reciprocal tariffs on certain imports came into effect on August 7, 2025, with additional tariffs of another 25 per cent applied subsequently. The government has said it is pushing for greater diversification of export markets and products, a strategy Agarwal said was helping to navigate trade frictions and protect growth.

Market reaction and official commentary

Officials described the monthly performance as the best of the fiscal year, with the Commerce Secretary telling the press that the "good momentum" was supported by higher demand from major economies. A recent HSBC report said high-tech exports were showing relatively higher uplift, according to the Commerce Secretary's remarks. The latest figures, Agarwal said, reflected the "strong" and "remarkable" adaptability of Indian exporters in a challenging global environment.