India’s Trade Deficit Remains Manageable Despite Surge

India’s merchandise trade deficit has widened significantly this year, reaching a record $41.7 billion in October 2025. The sharp rise was largely attributed to a surge in gold and silver imports, coupled with contraction in exports to key markets. However, the Trade Secretary emphasized that the situation remains under control, with India’s external sector supported by strong fundamentals.  

Key highlights from the announcement include  

• India’s trade deficit hit $41.7 billion in October 2025, the highest monthly gap on record.  
• Gold and silver imports surged nearly 200%, driving the imbalance.  
• Exports contracted by 11.8% in October, with declines in shipments to the US, UAE, Netherlands, and UK.  
• Despite the widening deficit, foreign exchange reserves remain robust, providing a buffer against external shocks.  
• India’s services trade surplus and capital inflows continue to balance merchandise trade pressures.  
• The Trade Secretary stressed that the deficit is not in a “worrying zone” and is being closely monitored.  
• Policy measures, including diversification of exports and trade negotiations, aim to stabilize the external sector.  

This assessment highlights India’s resilience in navigating global headwinds. While import-driven pressures have widened the deficit, strong reserves and services exports ensure stability, keeping the external sector within manageable limits.  

Sources: Business Standard, The Hindu, Economic Times