Declining for the fifth month in a row, exports fell by 10.8% to $23.7 billion (Rs 124,899 crore) in September under the impact of the global economic slowdown, widening the country's trade deficit to a 16-month high of $18 billion against $13.2 billion a year ago.
Trade gap is a cause of concern as it leads to rise in a country's current account deficit.
Imports grew by 5% after a four-month decline to $41.8 billion from $39.8 billion in September 2011, mainly on the back of rising prices of crude oil. Oil imports during September increased by 30.7% to $14.1 billion from $10.8 billion a year ago.
"The contraction in global demand and deceleration in manufacturing are primary reasons for decline in exports," said Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO). However, the situation was likely to improve in the second half of the current fiscal, he added.
For the April-September period, exports dipped 6.8% to $143.6 billion from $154.1 billion in the same period last year.
"The markets in Europe, the US and Japan are still not showing healthy growth," said Ahmed.
Apparel Export Promotion Council (AEPC) chairman A Sakthivel said inflation, and especially the rising cost of fuel, is hurting exports.
Imports during the April-September period contracted by 4.4%, to $232.9 billion. Trade deficit during the period stood at $89.3 billion against $89.4 billion a year ago.
India last witnessed such a large trade gap in May 2011.