India’s trade deficit widened to a 12-month high of $39.88 billion in October as both merchandise imports and exports hit record highs of $89.35 billion and $49.47 billion, respectively, driven by higher fuel prices.
Data released by the Department of Commerce on Friday showed that exports jumped 45 per cent year-on-year (Y-o-Y) while imports rose 16.5 per cent Y-o-Y during the month.
Commerce Secretary Rajesh Agrawal said the growth rate of exports in October was the highest in the last five years, and outward shipments increased Y-o-Y to 43 of India’s top 50 export destinations.
The increase in inbound shipments was led by a 54 per cent Y-o-Y jump in imports of crude oil to $22.82 billion as the price of the Indian basket of crude oil surged to an over 14-year high of $119.91 a barrel in October.
The import of electronic goods also rose nearly 50 per cent Y-o-Y to $14.32 billion in October.
On the other hand, gold imports fell nearly 63 per cent Y-o-Y to $5.51 billion in October.
Fertiliser imports fell marginally to $2.44 billion from $2.47 billion last October.
The sharp increase in exports was led by petroleum products, whose shipments more than doubled Y-o-Y to $8.89 billion in October. Engineering goods exports grew 36 per cent Y-o-Y to $12.74 billion.
Outward shipments of electronic goods jumped to $6.64 billion in October from $4.08 billion a year ago. Gems & jewellery exports surged a little over 40 per cent Y-o-Y to $3.21 billion.
Among export destinations, the US retained the top spot in October, with outward shipments jumping nearly 39 per cent Y-o-Y to $8.72 billion.
China remained India’s largest import source, with inward shipments increasing nearly 47 per cent Y-o-Y to $16.26 billion in October. Exports to China also jumped a little over 48 per cent to $2.39 billion.
Imports from Russia surged 73 per cent Y-o-Y to $8.39 billion in October, potentially led by crude oil shipments.
India’s trade deficit in October was around 35 per cent higher than the average monthly levels seen in the first half of financial year 2026-27 (FY27), Aditi Nayar, Chief Economist of rating agency Icra, pointed out.
“Icra expects the CAD (current account deficit) to print at a modest 0.9 per cent of GDP (gross domestic product) in FY27, albeit with risks tilted to the upside,” Nayar said. “We expect a modest accretion to reserves in the fiscal, aided by the sizeable FCNR(B) [Foreign Currency Non-Resident Bank] deposit inflows,” she added.
The commerce department estimated India’s services exports at $40.51 billion in October, up 15 per cent Y-o-Y, while services imports were estimated to have risen nearly 17 per cent Y-o-Y to $20.72 billion. This resulted in an estimated services trade surplus of $19.79 billion. The Reserve Bank of India (RBI) is expected to release the final data on services trade later this month.
Cumulatively, India exported $309.06 billion worth of goods in the April-October period, up nearly 22 per cent Y-o-Y. Meanwhile, imports were 16 per cent higher Y-o-Y at $527.21 billion in the period. The trade deficit stood at $218.15 billion.
“The sustained growth in the first seven months strengthens confidence in India’s export capabilities and provides encouraging momentum towards the $1 trillion export aspiration,” said SC Ralhan, President of the Federation of Indian Export Organisations (Fieo). “Maintaining this trajectory will require consistent competitiveness across manufacturing and services,” he added.
