Trade deficit climbs to a record in October as gold imports triple

India’s trade deficit widened to a record $41.68 billion in October as a sharp spike in bullion purchases, primarily gold, and weaker exports combined to deliver one of the most unbalanced trade prints seen in recent years.

Commerce ministry data showed gold imports jumping nearly 200% to $14.72 billion, the highest monthly inflow on record. The surge, driven partly by festive and wedding-season demand, far exceeded typical seasonal patterns and became the single largest contributor to the month’s deficit.

Silver imports also rose sharply, climbing more than 500% to about $2.7 billion, adding to the pressure on the import bill.

Total imports increased 16.6% year-on-year to $76.06 billion, lifted by electronics, crude and chemicals in addition to bullion.

Exports declined 11.8% to $34.38 billion, reflecting softer global demand and tariff headwinds in key markets.

Taken together, the numbers highlight how quickly India’s external position can swing when domestic consumption rises at the same time global conditions weaken.

Analysts said the outsized increase in gold and silver imports may prove temporary but warned that October’s figures will weigh on the current account at a time when the rupee is already under pressure.

Economists pointed in particular to the divergence inside the export basket. Gems and jewelry shipments, typically among India’s most resilient earners, contracted sharply, with cut-and-polished diamond exports falling around 27%, mirroring weak global luxury demand.

While officials described some of the distortions as timing-related, they said that the deficit points to the need to stabilize export growth and monitor import trends more closely through the remainder of the financial year.

Services exports, which have cushioned goods-trade volatility in recent quarters, will take on a larger role as the merchandise gap widens.

October’s data offer a clear accounting of the forces tugging at India’s trade balance: buoyant domestic demand, a sudden rush for bullion, and a global environment that continues to weigh on outbound shipments, analysts added.