A broadcast screen at the Bombay Stock Exchange (BSE) in Mumbai, India, on April 3, 2025, displays news of U.S. President Donald Trump announcing sweeping new trade tariffs.
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India’s goods trade deficit hit an all-time high of $41.7 billion in October as gold imports surged on festive season demand, while exports to U.S. bore the brunt of steep tariffs.
The deficit, which was sharply wider than Reuters poll estimates of $28.8 billion, topped the previous all-time high of $37.8 billion in November 2024, according to LSEG data.
During October, India imported gold worth of $14.7 billion, up nearly 200% from a year earlier, data from the country’s commerce ministry released Monday showed. Indian consumers are estimated to have bought gold worth $11 billion during the 5-day festival period in October.
The impact of tariffs was also visible in trade data as India’s exports to the U.S. fell for a second consecutive month since the 50% tariffs came into effect in August end. Shipments to U.S. fell 8.5% year on year in October to $6.3 billion.
Despite the decline, the U.S remained India’s largest exports destination during the first 7 months of this fiscal year, accounting for shipments worth $52 billion.
India exported gems and jewelry worth $2.3 billion in October down 29.5%, engineering goods worth $9.4 billion, down 16.7%. Exports of cotton and man-made yarn and ready-made garments fell 12%-13%. The U.S. is the top export destination for all these commodities.
Meanwhile, India’s exports to China rose 42% to $1.6 billion.
The country’s merchandise imports are “expected to cool somewhat in November-December 2025 from the October levels” due to a sequential dip in gold imports as the festive season ends and some pickup in exports, Moody’s-owned Indian credit rating firm ICRA Research said in a note on Monday.
But it cautioned that India’s current account deficit is set to “widen materially to 2.4-2.5% of GDP” in the third quarter of fiscal year ending March 2026. It expects the ratio of CAD to gross domestic product to be around 1.2% in fiscal year 2026, if the 50% U.S. tariffs continue until end-March 2026.
Trade negotiations between U.S and India have been underway for months, but a deal has been elusive so far. Both sides have begun to soften their stance, with U.S. President Donald Trump hinting at reducing tariffs on India.
Reaching out to Washington, New Delhi has increased oil and gas purchases from the U.S. to reduce the trade surplus it enjoys with Washington. The country is also expected to purchase farm products from the U.S.
