India’s Trade Deficit Hits Record $41.68bn in October as US Tariffs Bite and Gold Imports Surge

India's trade deficit widened to a record $41.68bn in October as 50% punitive tariffs imposed by the US remained in force for the second consecutive month. The expanding gap between exports and imports was driven largely by a surge in gold and silver purchases, according to official data released on Monday.

India’s merchandise exports fell 11.8% year-on-year to $34.38bn in October, down from a record $38.98bn a year earlier. Shipments to the US also declined, dropping 8.55% to $6.31bn from $6.9bn in the same month last year.

India's merchandise exports stood at $36.38bn in September, while imports climbed sharply in October to $76.06bn from $68.53bn the previous month.

Commerce Secretary Rajesh Agrawal said there were still encouraging signs. "If you look at export growth, total exports for the first seven months are estimated at $491.8bn, compared with $469.11bn last year — registering a growth of 4.84%. That is a positive fact," he said.

Agrawal attributed the spike in October’s deficit to bullion inflows. Strong festive-season demand had likely pushed gold imports to $14.72bn last month, up from $4.92bn a year earlier — an increase of about $9.8bn and nearly 200%. Silver imports similarly rose from $0.43bn to $2.72bn.

"The surge is notable because India’s gems and jewellery exports fell 29.5% in October, indicating that most of the gold and silver inflows are feeding domestic demand rather than export production," said Ajay Srivastava, founder of trade policy think tank Global Trade Research Initiative.

Srivastava also highlighted that India’s export performance in October 2025 was sharply uneven across the top 20 markets, as only five of them recorded year-on-year growth.

Rajeev Juneja, president at PHDCCI, said India’s overall exports — merchandise and services combined — grew 4.84% from $491.80bn during April–October 2024 to $496.11bn in the same period of 2025, driven largely by services. “Services exports grew strongly at 9.75%, from $216.45bn during April–October 2024 to $237.55bn during April–October 2025,” he stated.

The commerce ministry indicated that the first tranche of the India-US bilateral trade agreement is likely to be finalised soon, which is expected to bring down the so-called "reciprocal tariffs" significantly, providing much-needed relief to Indian exporters.

Meanwhile, the Indian government and the central bank recently announced support measures for exporters, including incentives for the export promotion mission and relief on loan repayments.