The trade deficit, the smallest since March's $7.83 billion figure, stood at $13.06 billion in August, which was a 23-month high, said India's Commerce Secretary Rahul Khullar while revealing the figures.

Last month, Khullar had said India's trade deficit is likely to touch $135 billion for this fiscal year against an earlier forecast of $120 billion.

While Asia's third-largest economy witnessed a 23.2 percent year-on-year surge in exports to $18.02 billion in September, imports for the month grew by annual 26.1 per cent to $27.14 billion, said Khullar.

"India is on course to achieving its goal of racking up $200 billion in exports during the fiscal year to March," he said, adding that last month's strong exports increase was helped by the low base of comparison last year, when the global trade was hit by economic slowdown worldwide

"Some sectors have done well, particularly engineering, gems & jewelry, readymade garments, marine products, leather & leather products," said Khullar.

In the first half of the fiscal year, exports aggregated to $103.30 billion, increasing by 27.6 per cent, while the cumulative imports for the period went up to $ 166.5 billion, leaving a large trade gap of $ 63.2 billion.

"The government has been monitoring the trade deficit," said India's Commerce and Industry Minister Anand Sharma, adding that the country is on track to meet its 2010-11 export growth target of close to 15 percent.

India's exports had dropped 4.7 percent in the previous fiscal year as the global economic slowdown affected demand.

A recent survey has revealed that exporters' confidence for the coming six months has increased despite appreciating rupee on the back of an improved demand in the traditional markets of the US and EU.

"Nearly 64 percent of the participating firms feel that overall export conditions are much better compared to the situation six months back," said the survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).

"The adverse movement in the value of the rupee blunts the effectiveness of these efforts leaving the exporters in the same position from where they started - one of compressed margins and profitability," the survey said, referring to the Indian currency that appreciated by about five percent against the dollar since January.

Separately, the total exports of gems and jewelry rose a staggering 56 percent to $4.06 billion in September, against $2.60 billion in the corresponding month of the previous year. Imports of the products also rose 54.27 percent to $2.84 billion last month as compared to $1.75 billion in September last year.

During the first half of the current financial year, total exports of gems and jewelry was recorded at $18.89 billion, a sharp rise of 45.84 percent as compared to $12.95 billion in September last year.

According to the FICCI survey, importers of gems and jewelry, handicrafts and textiles in US and EU are stocking up in the expectation of better demand in their markets in the wake of upcoming festive season.