New Delhi, Sep 16 — India’s goods trade deficit narrowed, led mainly by non‑electronic items, but the electronics trade deficit remained high at around $8 billion in August and about $40 billion since April, a report said on Wednesday.
The report from HSBC Global Investment Research said that electronics is becoming “the new oil”, with the two deficits inching very close in value terms.
India’s goods trade deficit narrowed to $27 billion in August from $32 billion in July, driven by a lower import bill even as export earnings were unchanged in dollar terms.
On a seasonally adjusted basis the deficit was even narrower at $23 billion, down from $31 billion in the previous month.
The improvement in exports was across all major categories and India continues to export 40 per cent of the oil imported - lowering its oil trade deficit. Gold trade deficit narrowed, but that may not linger for long as the festive season starts, the report noted.
Non-oil export growth remains impressive, clocking a sequential growth for a fifth month. Exports of all the major categories rose in sequential terms, led by particularly robust gains in electronics and engineering.
Shipments to Singapore, Malaysia, Hong Kong, South Africa and Mainland China have been especially strong since the start of 2026.
The increase in India's exports to these markets may partly reflect improved price competitiveness, following a sharp depreciation of the INR - 12 per cent against the US Dollar, 21 per cent versus the GBP and 25 per cent versus the EUR.
Exports are strong, but not strong enough to sustainably lower the trade deficit, the report said, highlighting a "missing middle" in India's exports.
Labour-intensive mid-tech exports are consistently weak and did not react to exchange rate competitiveness, it said.
Mid-tech exports face a higher tariff from destination markets, compared to India's peers and it could present a huge opportunity for the country, the report noted. India has recently accelerated the pace of signing trade agreements across multiple countries and regions. Once implemented, these are likely to lead to lower tariff rates on India's mid-tech exports, further improving good exports.
Services trade balance for August is estimated at around $17 billion, slightly below July's final surplus of $18 billion. These August figures are provisional estimates from the Ministry of Commerce & Industry.