New Delhi [India], November 24 (ANI): India’s merchandise trade deficit widened to a record $41.7 billion in October 2025, driven by a surge in gold and silver imports and a renewed contraction in exports, according to the Reserve Bank of India’s State of the Economy report in its November 2025 Bulletin.
The deficit, the largest for any month on record, reflected a combination of festive-season import spikes, subdued global demand, and broad-based increases in non-oil, non-gold imports, the report stated.
The RBI noted that India’s merchandise exports fell back into contraction in October after three straight months of growth. Weak global manufacturing and services activity, particularly in export orders, continued to weigh on outbound shipments. Global PMI data cited in the report indicated that new export orders remained in negative territory, even as overall global output saw modest growth.
The bulletin highlighted a sharp rise in gold and silver imports as a major contributor to the record deficit. October, coinciding with the peak festive season, typically drives jewellery demand, and this year saw a notable increase in both physical and digital gold purchases. Digital gold even featured among the top UPI merchant transaction categories during the month.
Elevated global bullion prices further inflated India’s import bill, with RBI charts showing gold prices hovering near historical highs.
Beyond precious metals, imports of electronic goods, machinery, chemicals, and consumer items also rose in October. The RBI attributed this to strong domestic consumption and festive-season stocking by businesses. Oil imports, however, remained stable as subdued global crude prices helped limit energy-related pressures on the deficit.
Despite the deterioration in merchandise trade, the RBI said India’s external position remained broadly stable, supported by robust services exports, healthy remittance inflows, and comfortable foreign exchange reserves.
The bulletin also noted that the U.S. decision to grant tariff exemptions to select Indian agricultural products from November 14 may offer limited support to export performance in the coming months.
Economists contributing to the Bulletin expect the October spike to be temporary, driven largely by festive imports and precautionary restocking. Gold imports typically moderate as winter progresses. However, the RBI cautioned that global trade uncertainty, contracting export orders, and volatile financial markets continue to pose risks to India’s trade outlook. (ANI)
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