India trade deficit widens to $34.68 billion in January as gold imports rise

NEW DELHI: India’s merchandise trade deficit widened to $34.68 billion in January, government data released on Monday showed, marking the final month impacted by steep U.S. tariffs on Indian exports.

Goods imports rose due to gold and silver shipments, an official said.

Economists had expected the January trade deficit to be $26 billion, according to a Reuters poll, compared to a deficit of $25.04 billion in the previous month.

India’s merchandise exports fell to $36.56 billion in January from $38.51 billion in December, while imports rose to $71.24 billion from $63.55 billion, driven by rise in gold and silver imports.

India’s $500 billion US imports intent draws scepticism, risks widening trade deficit

U.S. President Donald Trump earlier this month said he would slash tariffs on Indian goods to 18% from 50%, sparking relief among exporters and policymakers. Trump said, as part of the agreement, India has agreed to cut Russian oil purchases and intends to more than double its annual imports of U.S. goods.

The January numbers reflect the final impact of Trump’s 50% tariff on India, as the effective rate has fallen to 25% and is expected to ease further to 18% as India and the U.S. are set to sign a proposed trade agreement in March.

The two nations are currently working on the pact on the basis of an interim framework.

The U.S. had imposed a punitive tariff of 25% on Indian shipments for imports of Russian crude oil.

India has also signed a trade pact with the European Union, which is expected to come into force within a next year.