India's trade deficit shrinks to around $26.5B in August
What's the story
India's merchandise trade deficit has narrowed to $26.49 billion in August, down from $27.35 billion in July, as per provisional data from the Indian government. The change comes as exports continue to be affected by the stalled India-US trade deal negotiations. The US accounts for nearly 20% of India's goods exports, making it a crucial market for our products.
Policy change
Centre relaxes norms under Advance Authorization Scheme
In a bid to cushion domestic exporters from the impact of stalled trade negotiations, the Indian government has relaxed norms under the Advance Authorization Scheme. The new rules permit duty-free import of raw materials for export production. This comes as an effort to mitigate the effect of ongoing US tariffs on Indian goods.
Trade figures
Exports decline amid tariff hikes
In August, India's exports fell to $35.1 billion from July's $37.24 billion, while imports also declined from $64.59 billion in July to $61.59 billion last month. The government estimated services exports for August at $34.06 billion and imports at $17.45 billion, indicating a total goods and services trade deficit of about $9.88 billion for the month under review.
Tariff effects
Exports to the US fell from $8.01B in July
Indian exports to the US fell from $8.01 billion in July to $6.86 billion last month. The decline comes after US President Donald Trump imposed an extra 25% tariff on Indian products over New Delhi's continued purchases of Russian oil. The move raised total levies on Indian exports to 50%, one of the highest rates for any trading partner with the US.