India’s October Trade Deficit Hits New Record as Gold Imports Surge

New Delhi – India’s merchandise trade deficit rose to an all-time high in October, driven largely by a jump in gold imports and continued weakness in shipments to the United States.

Government data showed the deficit widening to $41.68 billion, marking the second straight month of significant pressure on the country’s external trade position.

The October shortfall surpasses the 13-month high recorded in September, when the deficit reached $32.15 billion.

The latest figures reflect persistent challenges in global demand, along with the effects of steep U.S. tariffs that have weighed heavily on key export categories.

Economists had expected a deficit of around $28.8 billion, making the final number much higher than anticipated.
Exports to the U.S., India’s largest trading partner, continued to feel the impact of tariff-driven disruptions during the second full month of the new trade measures.

U.S. tariffs of up to 50% on Indian goods, imposed at the end of August, have reduced demand for products such as textiles, shrimp, and gems and jewellery.
Shipments to the U.S. fell nearly 9% year-on-year in October, although they were slightly higher than in September.

Overall merchandise exports declined to $34.38 billion, down from $36.38 billion the previous month.
Meanwhile, imports rose sharply to $76.06 billion, compared with $68.53 billion in September, reflecting stronger buying of key commodities.

Gold imports surged to $14.7 billion, up significantly from $9.6 billion the month before, contributing heavily to the widening deficit.
Crude oil purchases also increased, reaching $14.8 billion, compared with $14 billion in September.

India’s Trade Secretary Rajesh Agrawal said discussions with the United States on tariff adjustments are ongoing, though no timeline has been set.
He indicated optimism that mutually agreeable tariff decisions could emerge from the negotiations.

Imports from the U.S. rose in October, increasing to $4.47 billion from $3.98 billion in the previous month. The shift suggests that Indian demand for U.S. goods remains resilient despite broader trade tensions.

Services trade estimates for October showed exports at $38.52 billion and imports at $18.64 billion, resulting in a surplus of $19.88 billion.
The services sector continues to provide crucial support to India’s overall trade balance, helping offset the merchandise shortfall.

India has also experienced one of the sharpest declines in container volumes to the United States among major trading partners.
Supply chain data indicates an 18.5% drop in shipments from India, compared with a 16.3% decline from China.

Several countries, including Japan, Germany, South Korea, Vietnam, and Indonesia, saw rising import volumes into the U.S. due to recent tariff revisions.
These shifts highlight changing trade patterns as global firms adjust supply chains in response to policy changes.

In response to increasing pressure on exporters, the Indian government and the Reserve Bank of India announced a series of support measures last week. These include incentives designed to boost export performance and relief on loan repayments for firms facing cash flow constraints.

S.C. Ralhan, President of the Federation of Indian Export Organisations, said the steps provide essential relief.
He noted that extended timelines for shipping goods and improved liquidity support will help exporters navigate challenging conditions.

As negotiations continue with Washington, policymakers remain focused on stabilising India’s export momentum.
However, with global demand uneven and gold imports still elevated, trade pressures may persist in the coming months.