India’s merchandise trade deficit widened to a one-year high of $39.88 billion in October, exceeding forecasts as festive-season gold purchases and higher energy costs drove up imports.
The deficit topped the $32.25 billion forecast in a Reuters poll and widened from $30.21 billion in September.
The trade deficit last hit a record $42.58 billion in October 2025.
Gold imports nearly tripled to $5.51 billion from $1.8 billion in September, as jewellers and consumers stepped up purchases ahead of the Hindu festival of Diwali, when buying gold is considered auspicious.
India, the world’s second-largest gold consumer, relies heavily on imports to meet demand.
Mid-month, India’s market regulator nudged asset management firms to halt bulk purchases of gold exchange-traded funds to limit investment demand for gold-backed products.
A senior official said the recovery in gold imports this month was likely driven by a correction in global prices and pre-festive demand, though trade flows are influenced by multiple factors.
India, the world’s third-largest oil consumer after the United States and China, has also faced higher import costs due to energy-market disruptions caused by the Middle East conflict. India imports nearly 85% of its crude needs.
Brent crude futures have since fallen to around $95 a barrel, offering relief amid hopes of de-escalation following the Democrats’ victory in the US midterm elections.
Merchandise exports rose to $49.47 billion in October, up from the $44.40 billion of the previous month, government data showed, while imports rose to $89.35 billion against $74.61 billion in September.
“India recorded its highest-ever monthly goods exports in October 2026,” Trade Secretary Rajesh Agrawal said while releasing the trade figures on Friday.
Indian exports have grown steadily this year, helped by market diversification and new trade deals with the UK and New Zealand, while a landmark agreement with the European Union is expected to take effect early next year.
EXPORTS TO THE US
The US and India are continuing talks to finalise the first tranche of a bilateral trade deal, despite President Donald Trump’s Republican Party suffering heavy losses in the midterms, losing control of both chambers of Congress.
Agrawal said talks with Washington were “on the right track,” and that teams on both sides were engaged.
The US is the top destination for Indian exports, with goods shipments rising 14.5% year-on-year to $59.52 billion in April-October from $51.99 billion a year earlier.
India’s services exports were estimated at $40.51 billion in October, while imports stood at $20.72 billion, resulting in a services trade surplus of $19.79 billion, trade ministry estimates showed.
Overall goods and services exports rose 29.91% year-on-year to $89.99 billion in April-October, while imports increased 16.57% to $110.07 billion over the same period, data showed.
