Post by : Badri Ariffin

India’s merchandise trade deficit soared to an unprecedented $41.68 billion in October, driven by a sharp drop in exports and an unexpected spike in gold imports. The sudden jump has raised concerns over India’s external balance at a time when global demand is weakening and domestic consumption patterns are shifting.

Export figures for October slid by 11.8%, settling at $34.38 billion, marking one of the steepest declines seen this year. Imports, however, surged 16.6%, reaching $76.06 billion, widening the trade gap to the highest monthly level ever recorded.

A major contributor to this surge was the extraordinary rise in gold imports. India imported $14.72 billion worth of gold in October, almost triple the amount brought in during the same month last year. The ongoing festive and wedding season, combined with volatile international gold prices, pushed buyers to stock up heavily. Silver imports also jumped, adding further weight to the overall import bill.

Multiple export sectors faced sharp declines. Engineering goods, apparel, chemicals, pharmaceuticals, and gems and jewellery all saw noticeable drops as global demand softened across major markets. Electronics goods stood out as the only segment that recorded steady growth.

Geographically, India’s exports to key destinations such as the U.S., UAE, Netherlands, UK, and Germany fell significantly. China was the only major market where shipments increased, offering some relief amid the broad slowdown.

On the import side, purchases from Switzerland — a key source of gold — surged massively. Imports from China, UAE, Hong Kong, and the U.S. also increased, while crude-linked imports from Russia eased due to lower oil inflows.

India’s services sector continued to provide some cushion, with services exports rising to $38.52 billion, though this was offset partly by an increase in services imports as well.

The record deficit highlights a clear challenge ahead: while domestic demand for precious metals and high-value goods remains strong, export momentum has weakened sharply. The shift creates added pressure on India’s external position and signals the need for tighter trade management in the coming months.

#Business News