India’s Trade Deficit Hits 12-Month High as October Imports Reach Record $89.35 Billion

India’s merchandise trade deficit widened to a 12-month high of $39.88 billion in October 2026 as imports surged to a record level, highlighting the pressure rising import costs and seasonal demand are placing on the country’s external trade balance. The increase came even as merchandise exports recorded their highest-ever monthly value, demonstrating that strong export growth was not enough to offset the sharp rise in imports.

According to data released by the Ministry of Commerce and Industry on November 13, merchandise imports reached $89.35 billion in October, compared with $74.61 billion in September. Exports increased to $49.47 billion from $44.40 billion in the previous month. The resulting trade deficit was wider than September’s $30.21 billion and exceeded economists’ expectations of $32.25 billion.

India’s Trade Deficit Widens to $39.88 Billion

India’s merchandise trade deficit increased by nearly $9.7 billion month-on-month in October, reflecting the faster growth in imports compared with exports. The deficit was the highest recorded in a 12-month period, although it remained below the $42.58 billion gap reported in October 2025.

The October figure also exceeded the forecast in a Reuters poll, indicating that the increase in import demand was stronger than economists had anticipated.

The latest trade figures show that both sides of India’s merchandise trade expanded during the month. However, the increase in imports was substantially larger in absolute terms, widening the gap between the value of goods purchased from overseas markets and those sold abroad.

Key Trade Figures for October 2026

Indicator	October 2026
Merchandise exports	$49.47 billion
Merchandise imports	$89.35 billion
Merchandise trade deficit	$39.88 billion
September trade deficit	$30.21 billion
Reuters poll forecast	$32.25 billion
October 2025 trade deficit	$42.58 billion

Trade Secretary Rajesh Agrawal said India had recorded its highest-ever monthly merchandise exports in October. The export performance points to continued demand for Indian products in international markets, even as the country faces higher import expenditure.

Record Imports Driven by Gold Demand and Energy Costs

The increase in imports was influenced by several factors, including higher gold purchases ahead of Diwali and elevated energy costs associated with disruptions in international markets.

Gold imports nearly tripled in October to $5.51 billion, compared with $1.8 billion in September. India is the world’s second-largest gold consumer and depends heavily on overseas suppliers to meet domestic demand.

Purchases typically increase around major festivals, particularly Diwali, when gold buying is considered auspicious by many households. Jewellery manufacturers and consumers increased purchases ahead of the festival, contributing to the sharp rise in October’s import bill.

Gold prices and changes in global market conditions can also influence the timing and value of imports. A correction in international prices, combined with seasonal demand, was cited by a senior official as a possible reason behind the recovery in gold shipments.

Energy imports represent another important source of pressure. India is the world’s third-largest oil consumer and imports nearly 85% of its crude oil requirements. Consequently, disruptions in global energy markets can quickly increase the country’s import expenditure.

The continuing conflict and supply uncertainty in the Middle East have contributed to higher energy-related costs. These pressures can affect not only the value of crude oil imports but also transportation, freight and other expenses associated with international trade.

Exports Reach an All-Time Monthly High

Despite the widening trade deficit, India’s export performance remained strong in October.

Merchandise exports reached $49.47 billion, up from $44.40 billion in September. Business Standard reported that exports increased 45% year-on-year, making October the strongest month on record for Indian merchandise shipments.

The increase reflects India’s efforts to expand its presence in international markets and diversify export destinations. New trade agreements and improving access to overseas markets are expected to support the country’s export prospects.

The United States remains India’s largest export destination. According to Reuters, Indian merchandise exports to the US increased 14.5% year-on-year to $59.52 billion during April-October 2026, compared with $51.99 billion in the corresponding period a year earlier.

India is also seeking to strengthen commercial relationships with other major markets. Trade agreements with the United Kingdom and New Zealand have become part of its broader strategy to expand exports and reduce dependence on a limited number of destinations.

Negotiations with the United States are continuing, while the India-European Union trade agreement is expected to be implemented early next year.

India’s Merchandise Trade Performance During FY27

The cumulative trade figures for April-October 2026 show that both exports and imports have recorded growth during the first seven months of the financial year.

Merchandise exports reached $309.06 billion, representing growth of nearly 22% year-on-year. Merchandise imports increased approximately 16% to $527.21 billion.

The difference between the two figures resulted in a cumulative merchandise trade deficit of $218.15 billion during the April-October period.

Indicator	April-October 2026
Merchandise exports	$309.06 billion
Merchandise imports	$527.21 billion
Merchandise trade deficit	$218.15 billion
Export growth	Nearly 22%
Import growth	Approximately 16%

The cumulative figures indicate that exports have grown faster than imports over the seven-month period. However, the overall merchandise trade gap remains substantial because India’s import bill is significantly larger than its export earnings.

Services Trade Surplus Provides Support

India’s services exports continue to provide an important counterbalance to the merchandise trade deficit.

The Commerce Department estimated services exports at $40.51 billion in October, representing year-on-year growth of approximately 15%. Services imports were estimated at $20.72 billion, up nearly 17% from the corresponding period last year.

This resulted in an estimated services trade surplus of $19.79 billion.

The services sector includes activities such as information technology, business services, financial services, consulting and other professional services. India’s established position in global IT and business-process services has helped the country generate substantial foreign exchange earnings.

However, the October services figures are estimates. The Reserve Bank of India is expected to release the final services trade data later in November.

The services surplus is particularly important because it helps offset part of the merchandise trade deficit. Looking at goods and services together provides a broader picture of India’s external trade position than merchandise figures alone.

India Targets $1 Trillion in Total Exports

The government has set a target of achieving $1 trillion in total exports, combining merchandise and services, during the current financial year.

The strong export performance in October could support progress towards this objective. According to the latest estimates, combined merchandise and services exports increased 29.91% year-on-year to $89.99 billion during April-October 2026.

Overall imports of goods and services rose 16.57% to $110.07 billion during the same period.

India’s export strategy increasingly focuses on expanding market access, improving manufacturing competitiveness and integrating domestic businesses into international supply chains. Trade agreements with major economies are expected to create additional opportunities for exporters.

Nevertheless, achieving the government’s target will depend on sustained demand in overseas markets, competitive production costs and the ability of Indian businesses to manage global trade uncertainty.

The Bigger Picture

October’s trade figures present two contrasting developments in India’s external sector. On one side, merchandise exports reached an all-time monthly high, suggesting that Indian businesses are expanding their international reach. On the other, record imports widened the merchandise trade deficit to its highest level in 12 months.

The rise in gold purchases illustrates how seasonal domestic demand can influence monthly trade numbers. At the same time, India’s dependence on imported crude oil makes its trade balance vulnerable to international energy prices and geopolitical disruptions. A sustained increase in these costs could put additional pressure on foreign exchange expenditure and the country’s external account.

The services sector offers some support through its substantial trade surplus. However, the longer-term challenge remains improving merchandise export competitiveness while reducing excessive dependence on imported energy and other essential products.

Looking Ahead

India’s trade performance in the coming months will depend on whether export growth can remain strong enough to absorb fluctuations in import demand. Developments in global energy markets, festive-season purchasing patterns and international shipping costs will remain important factors influencing the country’s monthly trade balance. A moderation in gold and energy imports could help narrow the deficit, although the impact will depend on broader domestic and international demand conditions.

The government’s focus on trade agreements, export diversification and manufacturing expansion could support India’s longer-term ambition of becoming a larger participant in global trade. October’s record export performance provides an encouraging signal, but the widening deficit shows that stronger exports alone may not immediately resolve the country’s import dependence. The balance between export competitiveness, domestic demand and import costs will remain central to India’s external trade outlook.