India’s Trade Deficit Hits Record $41.7 Billion in October as Gold Imports Jump 200%

India’s goods trade deficit widened to a record $41.7 billion in October, far higher than estimates, as gold imports surged ahead of the festive season while exports to the U.S. continued to fall under steep tariffs.

According to data from the Commerce Ministry, the deficit was well above Reuters’ forecast of $28.8 billion and exceeded the previous record of $37.8 billion set in November 2024.

India’s gold imports rose nearly 200% year-on-year to $14.7 billion in October, driven by strong consumer demand during major festivals. Shoppers were estimated to have bought gold worth about $11 billion over the five-day festive period alone.

However, exports to the United States, India’s largest trade partner, dropped 8.5% to $6.3 billion in October, the second consecutive monthly decline since the U.S. imposed 50% tariffs in late August. Exports of gems and jewelry fell 29.5%, while engineering goods dropped 16.7%. Exports of cotton, yarn, and garments also declined around 12–13%.

In contrast, exports to China rose 42% to $1.6 billion, offering some relief to India’s overall trade figures.

Analysts at ICRA Research expect import levels to ease in the coming months as gold demand cools after the festive period. However, they warned that India’s current account deficit (CAD) could widen to 2.4–2.5% of GDP in the third quarter of the fiscal year ending March 2026.

Trade talks between India and the U.S. are ongoing, with both sides signaling a softer stance. President Donald Trump has hinted at the possibility of reducing tariffs, while New Delhi has increased imports of U.S. oil, gas, and farm products to narrow the trade gap.