India's October trade deficit hits one-year high of $39.88 billion as gold imports jump

NEW DELHI: 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 more than tripled to $5.51 billion from $1.8 billion in September, as jewellers and consumers stepped up purchases ahead of the Diwali festival, when buying gold is considered auspicious.

India, the world’s second-largest gold consumer, relies heavily on imports to meet demand. The country’s market regulator nudged asset management firms in mid-October 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 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. The country imports nearly 85% of its crude needs.

Silver demand seen down 5% this year due to weaker jewellery purchases

Imports of petroleum products, mainly crude oil, rose 54.31% year-on-year to $22.82 billion in October, reflecting the price surge. The average Indian crude basket had neared $120 a barrel, according to government estimates.

Brent crude futures have since then 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 from $44.4 billion in the previous month, government data showed, while imports increased 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 on Friday, citing a rise in exports of petroleum, electronics, engineering products and gems and jewellery.

Indian exports have grown steadily this year, helped by market diversification and new trade deals with the UK and New Zealand, while a significant agreement with the European Union is expected to take effect early next year.

Overall, goods and services exports rose 16.66% year-on-year to $568.84 billion during April through October, while imports increased 16% to $662.19 billion, widening the trade deficit to $93.35 billion from $83.25 billion, the data showed.

Exports to the US

Talks between India and the US were “on the right track,” Agrawal said, adding that teams on both sides were engaged.

The two countries are working on finalising the first tranche of a trade deal, despite President Donald Trump’s Republican ​Party suffering heavy losses in the midterms and losing control of both chambers of Congress.

India’s September merchandise trade deficit widens to $30.21 billion

Exports to the United States, India’s top market, rose to $59.52 billion during April through October from $51.99 billion a year earlier, a trade ministry official said.

India’s services exports were estimated at $40.51 billion in October and imports at $20.72 billion, resulting in a services trade surplus of $19.79 billion, trade ministry estimates showed.