Indian exports expanded 10.7% in August compared to a year earlier, according to official data. That was the fastest rate of expansion since April, and was the 12th straight rise, though it nonetheless lagged the 21.4% jump in imports for an eighth month. The resulting $11.6 billion trade deficit was inline with economists’ expectations for $11.2 billion according to Bloomberg.

Chart shows total Indian trade in goods. Calculations include data from Directorate General of Commercial Intelligence and Statistics Source: Panjiva

The growth in exports was led by commodities, with rice expanding by 39.7% and oil products surging 39.6%. Advanced value added goods did less well, with electronics growing by just 2.1% and pharmaceuticals by 4.0%. The latter may be held back be falling prices in the U.S., as outlined in Panjiva research of August 16.

A degree of volatility can be expected, with exports of gems and gold falling 25.8% and 39.9% from their peak in September. The increase in gold imports of 68.8% meanwhile accounted for 20% of the increase in the deficit. That’s led the government to consider leaving the metal out of future trade deals, the Economic Times – it can currently be imported on a duty- and tax-free sales basis.

Chart shows total Indian trade in goods, segmented by product. Calculations include data from Directorate General of Commercial Intelligence and Statistics Source: Panjiva

The Indian government is seeking to address the need for export growth through a variety of trade deals, including the RCEP project with China and ASEAN. The bigger challenge may come from relations with the U.S. Following a meeting between Prime Minister Modi and President Trump there is a push to look for “creative solutions”, in the context of a “comprehensive review”. U.S. Commerce Secretary Ross has called for a growing but “balanced” trade, Press Trust of India reports – repeating the administration’s usual focus on the trade deficit.

The challenge the U.S. faces is that the $23.0 billion trade surplus holds with it, Panjiva data for U.S. imports and exports shows, pales in comparison to India’s $50.0 billion trade deficit with China and $84.2 billion with the rest of the world. That indicates issues with savings and investment in India, and so India is unlikely to countenance a shift in relations that don’t involve a significant step up in Indian exports.

Chart segments India trade deficit with China and the rest of the world, with surplus vs. the U.S. ( imports by U.S. less exports to India) shown as a positive. Calculations include data from Directorate General of Commercial Intelligence and Statistics. Source: Panjiva