India’s Trade Deficit Widens to 13-Month High of $32Bn in September, Driven by Gold Import Spike

India’s merchandise trade deficit widened to a 13-month high of $32.15 billion in September as gold imports outweighed exports, which dropped particularly to the US following aggressive tariffs on Indian goods from Washington, data from the Ministry of Commerce showed on Wednesday.

The September trade data indicated a drop in shipments after India was slapped with sweeping 50% reciprocal tariffs by the US. However, ongoing trade talks between New Delhi and Washington pave the way for lower tariffs going forward, likely limiting the widening deficit.

Merchandise exports in September stood at $36.38 billion, slightly up from $35.10 billion in August, despite a fall in exports to the US, the data showed. Services exports stood at $30.82 billion. Overall exports rose marginally to $67.20 billion in September, compared to $66.68 billion a year ago.

Merchandise imports rose significantly to $68.53 billion despite the aggressive tariffs, the data from the ministry showed. Meanwhile, services imports dropped to $15.29 billion from $16.54 billion in the previous year. Overall imports for the month of September stood at $83.82 billion.

Gold Rally Amid Festive Season

The data showed that India’s trade deficit was primarily driven by a surge in gold imports ahead of the festival season. Gold imports spiked to $9.6 billion in September from $5.14 billion in August. Gold purchases for gold exchange-traded funds, amid weak stock market returns, also boosted demand.

“In September 2024–25, imports increased more sharply than exports. We examined the reasons and found that this rise was largely due to gold, silver, fertilisers, and electronics," Commerce Secretary Rajesh Agarwal said.

Export Shows Positive Growth

The ministry informed that during the first half of FY26, India's merchandise exports showed strong market diversification, with 24 countries — accounting for total exports of $129.3 billion — registering positive year-on-year growth.

Between April and September, India’s goods exports rose to $220.12 billion compared to $213.68 billion a year ago, while imports inched up to $375.11 billion from $358.85 billion in the corresponding period a year ago. India’s services exports for last month stood at $193.18 billion, up from $182.03 billion a year ago.

“Services exports have grown from $182 billion to $193 billion, while goods exports have remained largely stable, moving from $213 billion to $212 billion. Overall, this makes for a strong first-half performance,” Agarwal added.

“Twenty-two commodities with total exports of $162 billion recorded positive growth during April–September, accounting for 73.5% of India’s total exports,” the ministry said.

Meanwhile, India’s merchandise imports between April and September rose to $375.11 billion from $358.85 billion a year ago. Services imports remained muted and stood at $97.68 billion, compared to $97.73 billion a year ago.

Petroleum, crude and related products were the biggest contributors to the import basket, followed by electronic goods, and both electrical and non-electrical machinery, as well as gold.

Non-petroleum exports rose 7.04% to $189.49 billion during April–September compared to the previous year, while non-petroleum imports climbed to $282.98 billion, up 6.46% over the same period.

Despite the ongoing tariff uncertainties, the US remained the top export destination for Indian products. However, shipments to the US fell by $5.43 billion to $45.82 billion between April and September. China was the largest source of imports for India, followed by the United Arab Emirates and Russia during the same period.

 [With inputs from Devabrata Dutta]