India’s merchandise trade deficit widened to a one-year high of $39.88 billion in October, driven by a surge in imports amid elevated energy prices due to the West Asia conflict. Exports hit a record $49.47 billion, up 45% year-on-year, but imports climbed even higher to $89.35 billion, fueled by a 54.3% jump in petroleum imports to $22.82 billion. ICRA chief economist Aditi Nayar noted that the export growth was magnified by a low base from the shifted festive calendar and commodity price inflation since February 2026.
The wider trade deficit may increase pressure on the rupee by boosting demand for dollars to pay for imports. However, the Reserve Bank of India’s FCNR(B) deposit initiative has strengthened its foreign-exchange reserves, helping manage volatility. Gold imports nearly tripled to $5.51 billion in October, as jewellers stocked up ahead of Diwali, offsetting some gains from strong goods exports.
Key export drivers in October included petroleum products, electronics, gems and jewellery, chemicals, and engineering goods. Core exports, excluding volatile segments, rose nearly 33% year-on-year to $37.38 billion. The services trade surplus narrowed the overall trade deficit to $20.08 billion, down from $25.15 billion a year earlier.
Commerce secretary Rajesh Agrawal highlighted steady export growth supported by market diversification and new trade agreements with the UK and New Zealand. Negotiations with the US on a proposed trade deal are reportedly on track, with the US being India’s largest export destination. Experts praised the export performance, noting resilience and opportunities despite global trade uncertainties.