India clocked its biggest-ever monthly goods trade deficit in October, according to fresh data from the Commerce Ministry on Monday, as gold shipments into the country exploded and exports to the U.S. continued to fall under the weight of steep new tariffs.
The shortfall hit $41.7 billion, shattering all previous monthly records and blowing past the Reuters-surveyed forecast of $28.8 billion. The previous record was $37.8 billion in November last year, based on LSEG numbers.
The biggest culprit of course is gold. Imports of the precious metal surged to $14.7 billion, nearly triple what they were a year ago, a 200% increase.
Indians also went on a gold shopping spree, snatching up roughly $11 billion worth over just five days during October’s festival season, which wiped out any gains from elsewhere and helped push the overall import bill through the roof.
U.S. tariffs crush exports for second month straight
The other side of the trade ledger didn’t help either. Exports to the United States dropped 8.5% year-on-year in October, sliding to $6.3 billion.
That marked the second straight month of decline since 50% tariffs kicked in at the end of August. Despite that slump, America still held on to its spot as India’s largest export destination, with $52 billion in shipments tallied for the first seven months of the current fiscal year.
Sector-wise, it was all red. Gems and jewelry exports crashed 29.5%, bringing in just $2.3 billion. Engineering goods weren’t spared either; those fell 16.7% to $9.4 billion. Clothes, cotton, and yarn were all caught in the same spiral, each losing between 12% to 13% year-on-year.
And again, the U.S. is the top buyer for all of those goods, so Washington’s tariffs are slicing deep into India’s core export base.
Interestingly, exports to China rose 42% in the same month, hitting $1.6 billion. But the jump wasn’t enough to offset the pain from the U.S. collapse or the rising cost of imports overall.
Festive gold spike fades, but CAD still under pressure
Looking ahead, the import madness is expected to slow down, according to analysts at ICRA Research, a unit of Moody’s.
They said in a note Monday that November and December should see a decline in gold shipments now that the festivals are over, and a mild recovery in exports could help rebalance things.
But they also warned that the current account deficit (CAD) is about to get worse, jumping to 2.4%–2.5% of GDP in Q3 of the fiscal year ending March 2026.
ICRA added that unless the U.S. pulls back those tariffs before the end of March, CAD will likely hover around 1.2% of GDP for all of FY26. And while there’s been some progress in trade talks between Washington and New Delhi, no deal has been signed yet.
President Donald Trump recently suggested he might roll back tariffs on India, but nothing official has come out of it.
In the meantime, India is buying more oil and gas from the U.S., and is also expected to import American farm goods, a move meant to narrow its surplus with the U.S. and show some goodwill at the negotiation table.
On the gold market itself, prices dropped again Tuesday, with spot gold down 0.8% to $4,011.85 per ounce as of 0646 GMT. U.S. futures for December delivery slid 1.6% to $4,010.90. The dollar held steady after a sharp rally the day before, which made gold more expensive for other currencies.
“The dollar was a bit stronger today and also some of the speculative length has been reduced this past week. The gold market is going to consolidate for now,” said Edward Meir, analyst at Marex.
Gold typically rallies when rates fall, but the Fed’s Vice Chair Philip Jefferson said Monday that the central bank would need to “proceed slowly” with cuts. That poured cold water on rate-cut hopes for December.
And now, with lawmakers ending the longest U.S. government shutdown, upcoming economic reports like September’s nonfarm payrolls will give more clues on where things are headed.
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