With merchandise exports contracting for the tenth consecutive month, India is likely to see its current account deficit (CAD) increase marginally to 1.6% of its gross domestic product (GDP) in fiscal 2016, up from 1.4% in the previous financial year.

The silver lining is that the impact will be negligible.

"But this (the deficit) is unlikely to rock the boat, as at current levels the deficit is still below the pain threshold of -2.5% and funded by ample portfolio inflows and long-term foreign direct investments," says Radhika Rao, Economist, Group Research, DBS Bank, Singapore, in her note.

However, she added that the precipitating fall in exports will impact growth since exports account for about 25% of India's GDP.

India's exports in September declined 24.3% on a year-on-year basis to $21.8 billion ($28.86 billion in September 2014), while imports fell 25.4% to $32.3 billion.

Gold imports contracted 45.6% to $2 billion in September 2015.

Exports for the six-month period (April to September) this fiscal stood at $133 billion, a significant fall of 17.6% on a year-on-year basis from $161 billion during the same period in 2014-15.

The six-month trade deficit stood at $68 billion, down from $72.69 billion in the corresponding period last year.

India is unlikely to surpass last year's merchandise exports that stood at $309.6 billion, if the declining trend continues.

The prospects for the remaining six months are bleak, with the global economy witnessing a sluggish growth, as indicated by the World Trade Organisation's downward revision of global growth a fortnight ago, to 2.8% in 2015, from 3.3% estimated in April.

Falling commodity prices and declining import demand prompted the WTO to project a pessimistic forecast.

India is likely to reach even last year's merchandise exports of $309.6 billion, if these factors are taken into account. This in turn, is bound to have consequences on the job front, as warned by the Federation of Indian Export Organisations (FIEO), a body set up by the Union ministry of commerce.

FIEO president SC Ralhan had said in June, citing order booking position, that "significantly decline in volume terms in months to come will result in layoff of workers".

It could spell trouble for the Modi government as Prime Minister Narendra Modi had made job creation a successful poll plank during the 2014 general elections. 

Ralhan, in his statement in response to September trade data, had sought for "immediate reintroduction of Interest Subvention, expansion of MEIS benefits and reduction of transaction cost by reducing procedural complexities and paper work".