India's September 2026 Trade Data: Record Exports, a Costlier Oil Bill and a Wider Deficit

India's merchandise exports rose to a record $42.1 billion in September 2026, up 12.6 per cent year on year, while imports rose 12.5 per cent to $68.4 billion. The trade deficit widened to $26.3 billion from $23.4 billion a year earlier, the Commerce Ministry said on 15 October [1].

The headline looks like a story of strength and strain at the same time, which is roughly right. Exports are benefiting from a weak rupee and a strong electronics and engineering base, while the import bill is being driven by crude at about $95 a barrel, gold and machinery. The services surplus remains the buffer that keeps the current account deficit manageable [1][2].

The numbers

Head	September 2026	September 2025	Change
Merchandise exports	$42.1 billion	$37.4 billion	+12.6%
Merchandise imports	$68.4 billion	$60.8 billion	+12.5%
Trade deficit	$26.3 billion	$23.4 billion	+12.4%
Services exports	$34.2 billion	$30.1 billion	+13.6%
Services imports	$16.4 billion	$14.6 billion	+12.3%
Services surplus	$17.8 billion	$15.5 billion	+14.8%

Source: Ministry of Commerce and Industry, trade data for September 2026 [1].

The combined goods and services deficit, which is what matters for the current account, was $8.5 billion. That is the goods deficit of $26.3 billion minus the services surplus of $17.8 billion. In September 2025 the same calculation gave $7.9 billion, so the combined deficit widened by $0.6 billion [1].

What drove exports

Five categories did most of the work.

• Engineering goods: $11.8 billion, up 14.2 per cent, led by machinery, auto components and electrical equipment. The UK FTA, in force since 1 October, is not yet in these numbers, so the gain is a pre-deal effect [1][3].
• Electronics: $4.6 billion, up 28.4 per cent, with smartphones and semiconductor components the fastest-growing lines. The PLI schemes are now visible in the monthly data [1].
• Petroleum products: $5.2 billion, up 6.1 per cent, as refiners exported more diesel and jet fuel after maintenance turnarounds ended [1].
• Pharmaceuticals: $2.9 billion, up 9.8 per cent, with formulations growing faster than bulk drugs [1].
• Textiles and gems: $3.4 billion and $3.1 billion respectively, both modestly higher, with gems constrained by weaker demand in the US and China [1].

The destination mix is shifting. Exports to the US grew only 4.2 per cent, reflecting the tariff wall, while exports to the UAE, the Netherlands, the UK and Japan grew in double digits. The Netherlands is now a top-five destination, largely because of petroleum products and machinery routed through Rotterdam [1].

The import bill

Imports rose for three reasons, and only one of them is price.

• Crude oil: $15.8 billion, up 18.4 per cent, as the average Brent price rose to about $95 a barrel and volumes held steady. Crude is India's single largest import, and every $10 on the price adds roughly $15 billion to the annual bill [1][4].
• Gold: $4.9 billion, up 22.1 per cent, as festive demand and a weaker rupee pulled forward purchases. Gold imports are volatile month to month and distort the headline deficit [1].
• Electronics and machinery: $8.2 billion and $7.6 billion respectively, both up in double digits, reflecting the investment cycle and the semiconductor import dependence of the electronics assembly sector [1].
• The non-oil, non-gold deficit: $5.6 billion, which is the cleanest measure of underlying trade imbalance and is roughly stable year on year [1].

The rupee and the deficit

The rupee averaged about 96.6 to the dollar in September, having slid from 92.4 at the start of the financial year. A weaker rupee makes exports cheaper in foreign currency and imports costlier in rupees, which is the classic J-curve: the trade balance worsens before it improves [2][5].

• The export gain is partly nominal. In dollar terms, exports rose 12.6 per cent; in rupee terms, the gain was larger, but so was the import bill.
• The deficit is financeable. An $8.5 billion combined monthly deficit is about 2.4 per cent of GDP on an annualised basis, within the range the RBI considers sustainable [2].
• The reserves cushion. Foreign exchange reserves fell $51 billion in September, to about $697 billion, as the RBI sold dollars to slow the slide. That is still a comfortable import cover of about ten months [2][5].

"Exports have held up despite a difficult global environment, and the services surplus continues to cushion the goods deficit."

That was the Commerce Secretary's framing at the data briefing. The services number is the part of the story that gets least attention and does most of the stabilising [1].

The policy backdrop

Three policy tracks will shape the next six months.

• US tariffs. Indian exports to the US face a tariff wall imposed in 2025, and the two sides are still negotiating a bilateral trade agreement. A deal would remove the single biggest drag on India's largest export market [3][6].
• The India-UK FTA. In force since 1 October, it should show up in the October and November data, particularly in textiles, leather and auto components [3].
• The India-EU talks. Negotiations on a free trade agreement continue, with tariffs on cars, wines and services the sticking points. A conclusion in 2027 would be the largest of the three [6].

Quick answers

What were India's exports in September 2026? $42.1 billion, a record, up 12.6 per cent year on year [1].

What were imports? $68.4 billion, up 12.5 per cent, with crude oil at $15.8 billion and gold at $4.9 billion [1].

What was the trade deficit? $26.3 billion, wider than the $23.4 billion recorded in September 2025 [1].

What was the services surplus? $17.8 billion, which reduced the combined goods and services deficit to $8.5 billion [1].

Why did the rupee weaken? A wider current account deficit, portfolio outflows and a stronger dollar after the US Federal Reserve's September rate move pushed the rupee to about 96.6 to the dollar [2][5].

What is the exam takeaway? Know the difference between the merchandise deficit and the current account deficit, the role of the services surplus, and the J-curve effect of depreciation.

Sources

1. Ministry of Commerce and Industry: India's trade data for September 2026. 15 October 2026. https://www.commerce.gov.in
2. Reserve Bank of India: Balance of payments and foreign exchange reserves, September 2026. https://www.rbi.org.in
3. Press Information Bureau: India-UK FTA enters into force. 1 October 2026. https://www.pib.gov.in
4. Petroleum Planning and Analysis Cell: Crude oil import data, September 2026. https://www.ppac.gov.in
5. Reserve Bank of India: Weekly Statistical Supplement, 9 October 2026. https://www.rbi.org.in
6. Ministry of Commerce and Industry: India's trade policy engagements, 2026. https://www.commerce.gov.in