India's goods trade deficit in October shatters records, beating estimates, as gold imports surge 200%

Core Insights - India's goods trade deficit reached a record high of $41.7 billion in October, driven by a surge in gold imports and the impact of U.S. tariffs on exports [1][2] Trade Deficit and Imports - The trade deficit significantly exceeded Reuters poll estimates of $28.8 billion and surpassed the previous record of $37.8 billion set in November 2024 [2] - Gold imports in October amounted to $14.7 billion, marking an increase of nearly 200% compared to the same month last year, with consumers estimated to have spent $11 billion during the five-day festival period [2] Exports and Tariff Impact - Exports to the U.S. declined for the second consecutive month, falling 8.5% year-on-year in October to $6.3 billion due to the 50% tariffs implemented at the end of August [3] - Despite the decline, the U.S. remained the largest export destination for India, with shipments worth $52 billion in the first seven months of the fiscal year [3] - Key exports such as gems and jewelry fell by 29.5% to $2.3 billion, while engineering goods decreased by 16.7% to $9.4 billion [4] Future Outlook - Merchandise imports are expected to decrease in November and December 2025 as gold imports decline post-festival season, alongside a potential increase in exports [5] - India's current account deficit is projected to widen to 2.4-2.5% of GDP in the third quarter of the fiscal year ending March 2026, with a CAD to GDP ratio of around 1.2% for fiscal year 2026 if U.S. tariffs remain in place [6] Trade Negotiations - Ongoing trade negotiations between the U.S. and India have yet to yield a deal, although both sides are softening their positions, with hints from U.S. President Trump about potential tariff reductions [7] - India has increased oil and gas purchases from the U.S. to address the trade surplus and is expected to buy agricultural products as well [7]