Trade deficit hits 13-month high as US exports fall 12%, gold imports surge

India’s trade deficit widened to a 13-month high in September, driven by a sharp rise in bullion imports, even as merchandise exports grew 6.7 per cent year-on-year (Y-o-Y) to $36.38 billion, data released by the commerce department on Wednesday showed.  This growth came despite shipments to the US contracting about 12 per cent, following the 50 per cent tariff that came into full force in September.  Imports grew at a faster pace of 16.7 per cent at $68.53, resulting in the trade deficit widening to $32.15 billion during the month.  The trade deficit stood at $24.65 billion in September 2024. However, services exports contracted 5.5 per cent to $30.82 billion, while imports shrank 7.6 per cent to $15.3 billion, resulting in a surplus of $15.5 billion. Services trade data for September is an “estimate”, which will be revised based on the Reserve Bank of India’s subsequent release, the commerce department clarified. 

The surge in inbound shipments in September was led by a 107 per cent jump in gold imports to $9.6 billion.  

Silver imports grew 139 per cent to $1.3 billion. Fertiliser shipments rose 202 per cent to $2.36 billion, while electronics imports grew 15 per cent to $9.82 billion during the month. 

Commerce Secretary Rajesh Agrawal said that despite a surge in gold imports in September, in terms of volume, cumulative imports (April-September) were over 8.7 per cent lower as compared to the same period last year. While the commerce department is closely assessing the reasons behind the surge, a jump in gold imports could be due to the festival season. 

“Despite the turbulence in global market, our exports have maintained momentum…despite the higher tariffs imposed by the US (on certain Indian exports), industry has been trying to maintain the supply chains,” Agrawal told reporters, adding that many of these supply chains are product-and-design specific, making it difficult for buyers to shift supply chains overnight. “But the impact on the industry will depend on how long these tariffs remain”. 

Since the cumulative 50 per cent tariff by the US on Indian goods kicked in from August 27, September saw the full impact of the duty. 

“We need to do a deep dive and look at commodity-level data. Around 45 per cent of our exports to the US remain outside the (50 per cent tariff). The impact on these products will be different,” Agrawal said. 

The government estimates that as much as 55 per cent of India’s total merchandise exports to the US will be impacted by the additional tariff. The assessment of the extent of impact on sectors facing higher tariffs is still being done. Shrimp, textiles, and gems & jewellery are expected to be the worst hit segments. 

Shipments to the US fell to $5.43 billion in September from $6.87 billion in August. On a Y-o-Y basis, exports to the US declined by nearly 12 per cent. 

During the first half of FY26 (April-September), India’s goods exports grew 3 per cent to $220.12 billion, while imports increased 4.5 per cent to $375.11 billion. 

Non-petroleum and non-gems and jewellery exports, an indication of exports’ health, grew 6 per cent at $28.59 billion. The drivers of the growth among non-petroleum sectors were engineering goods (2.93 per cent), electronics (50.54 per cent), drugs and pharmaceuticals (2.56 per cent), organic and inorganic chemicals (1.76 per cent).