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Key Points

India's trade deficit expanded to $28 billion in September as gold imports nearly doubled. The surge came despite record-high prices, driven by festive and wedding season demand. Meanwhile, delays in the US-India trade deal are weighing on export prospects to America, which accounts for 20% of India's goods exports. While trade talks continue through November, the deficit is expected to remain elevated in the near term due to strong import demand and muted export growth.

Key Points: India Trade Deficit Widens to $28 Billion on Gold Imports Surge

  • Gold imports nearly doubled month-on-month despite record-high prices
  • Festive and wedding season demand fueled the surge in bullion purchases
  • US-India trade deal delays affecting 20% of India's export market
  • Trade deficit expected to remain elevated due to strong import demand
  • Ongoing trade negotiations with US offer potential export recovery pathway
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India's merchandise trade deficit likely widens to USD 28 billion in September amid gold imports surge: UBI Report

India's trade deficit hits $28 billion as gold imports double amid festive season demand, while US trade deal delays weigh on export recovery prospects.

"India's merchandise trade deficit likely widened to USD 28.0bln in Sep'25, compared to USD 26.5bln in Aug'25, driven primarily by a surge in gold imports. - UBI Report"

New Delhi, October 12

India's merchandise trade deficit is expected to have widened to USD 28.0 billion in September 2025, up from USD 26.5 billion in August, according to a report by Union Bank of India.

The increase in the trade gap is driven primarily by a sharp rise in gold imports, which nearly doubled month-on-month despite record-high prices.

The report stated, "India's merchandise trade deficit likely widened to USD 28.0bln in Sep'25, compared to USD 26.5bln in Aug'25, driven primarily by a surge in gold imports."

The report noted that the surge in gold demand was largely fueled by the onset of the festive and wedding season, which typically boosts bullion purchases.

This increase occurred even as global commodity prices saw only a modest rise, with the CRY Index edging up to 301.78 in September from 296.64 the previous month.

In addition to gold imports, overall trade dynamics were likely affected by a delay in the US-India trade deal. The United States accounts for roughly 20 per cent of India's goods exports, and a slowdown in bilateral trade momentum could weigh on outbound shipments.

Looking ahead, the trade deficit is expected to remain elevated in the near term. Strong gold imports ahead of the festive season, firm energy demand, and continued reliance on electronics and capital goods imports are likely to keep the deficit high.

While some relief may come from softening global commodity prices and ongoing import substitution initiatives, export growth remains muted amid weak global demand and tariff-related challenges.

On the trade negotiations front, India and the US are making progress toward a potential first-phase trade agreement, with discussions expected to continue through November 2025.

Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar highlighted the importance of constructive engagement but emphasised the need to protect India's core interests.

Once implemented, reduced tariff barriers under the agreement could support a recovery in exports to the US, India's key trading partner.

So the report outlined that India's trade deficit is poised to remain under pressure in the near term due to strong import demand and limited export growth. In contrast, ongoing trade talks with the U.S. offer a potential pathway for future improvement.

- ANI

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Reader Comments

R
Rohit P
This is exactly why we need to focus on 'Make in India' more aggressively. We're importing gold, electronics, capital goods - when will we become self-reliant? 🇮🇳
S
Sarah B
As someone working in exports, I can confirm the US trade deal delay is hurting us badly. 20% of our exports go there - we need this agreement finalized ASAP to boost outbound shipments.
A
Arjun K
Gold is part of our culture, especially during weddings and festivals. But maybe we should consider digital gold or gold bonds instead of physical imports? Would help both tradition and economy. 🙏
M
Michael C
While I respect the cultural significance of gold, the economic impact can't be ignored. The government should consider temporary import duties or awareness campaigns about the economic consequences of such high gold imports.
K
Kavya N
Hoping the US-India trade deal works out by November! Our exporters really need that boost. Goyal and Jaishankar are right to protect our interests while negotiating. 🤞
V
Vikram M
The trade deficit pressure is real, but let's not panic. Festive season imports are temporary. What matters is the long-term strategy - and the US trade deal seems promising for our export growth.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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