Broadcast screens at the Bombay Stock Exchange (BSE) in Mumbai, India, on April 3, 2025, show news that U.S. President Donald Trump has announced significant new trade tariffs.
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India’s trade deficit in goods hit a record $41.7 billion in October as gold imports surged on festive season demand, while exports to the United States bore the brunt of high tariffs.
The deficit was significantly higher than the $28.8 billion expected in a Reuters poll and surpassed the previous record high of $37.8 billion set in November 2024, LSEG data showed.
India imported $14.7 billion worth of gold during October, an increase of almost 200% year-on-year, according to data from the country’s Ministry of Commerce released on Monday. Indian consumers are estimated to have purchased $11 billion worth of gold during the five-day festival in October.
The impact of the tariffs was also felt in trade statistics, as India’s exports to the United States fell for two consecutive months after the 50% tariff went into effect at the end of August. The value of shipments to the United States in October was $6.3 billion, down 8.5% from the previous year.
Despite the decline, the US remained India’s largest export destination in the first seven months of this fiscal year, with shipments worth $52 billion.
India exported gems and jewelry worth $2.3 billion, down 29.5%, and engineering products worth $9.4 billion, down 16.7% in October. Exports of cotton, synthetic yarn and ready-made clothing fell by 12-13%. The United States is the largest export destination for all these goods.
Meanwhile, India’s exports to China increased by 42% to $1.6 billion.
India’s credit rating agency ICRA Research, part of Moody’s, said in a note on Monday that the country’s merchandise imports are “expected to moderate slightly from October levels in November-December 2025” due to a continued decline in gold imports and a partial pick-up in exports due to the end of the Christmas season.
However, the report warned that India’s current account deficit will “widen significantly to 2.4-2.5% of GDP” in the third quarter of the fiscal year ending March 2026. If the US’s 50% tariff continues until the end of March 2026, we expect the Canadian dollar’s share of gross domestic product to be around 1.2% in fiscal 2026.
Trade negotiations between the US and India have been ongoing for months, but so far no deal has been reached. Both countries have begun to soften their stance, with US President Donald Trump hinting at reducing tariffs on India.
New Delhi is working with Washington to increase its purchases of oil and gas from the United States to reduce its trade surplus with Washington. The country is also expected to buy agricultural products from the United States.
