India’s Trade Deficit Hits Record $41.7 Billion in October
India’s merchandise trade deficit surged to an unprecedented $41.7 billion in October 2025, marking the highest monthly gap on record, according to the Reserve Bank of India’s latest bulletin. The record deficit was primarily driven by a sharp spike in gold and silver imports alongside a contraction in exports after three months of growth.
Key Takeaways
- Trade deficit hits all-time high of $41.7 billion in October 2025
- Gold and silver imports surge during festive season peak
- Exports contract after three consecutive months of growth
- RBI expects the spike to be temporary, moderating in winter months
Gold Imports Drive Deficit
The RBI bulletin highlighted that gold and silver imports were a major contributor to the record deficit, coinciding with the peak festive season that typically drives jewellery demand. Digital gold purchases also climbed significantly, appearing among top UPI merchant transactions. High global bullion prices further inflated India’s import bill, with gold prices nearing historical highs during the period.
Export Contraction and Import Trends
India’s merchandise exports returned to contraction in October, weighed down by weakness in global manufacturing and services activity. Global PMI data showed new export orders remained in negative territory despite modest global output growth.
Beyond precious metals, imports of electronic goods, machinery, chemicals, and consumer items rose in October, attributed by the RBI to strong domestic consumption and festive stocking by businesses. However, oil imports remained stable as global crude prices stayed subdued.
External Position Remains Stable
Despite the merchandise trade deterioration, the RBI stated India’s external position remained broadly stable, supported by robust services exports, healthy remittance inflows, and comfortable foreign exchange reserves.
The report noted that US tariff exemptions for select Indian agricultural products from November 14 may provide limited support to export performance in coming months.
Outlook and Risks
RBI economists expect the October spike to be temporary, driven largely by festive-season imports and precautionary restocking, with gold imports typically moderating in winter months. However, the central bank cautioned that global trade uncertainty, contracting export orders, and volatile financial markets continue to pose risks to India’s trade outlook.
