New Delhi: India's merchandise trade deficit is expected to have widened to USD 28.0 billion in September 2025, up from USD 26.5 billion in August, according to a report by Union Bank of India.
The increase in the trade gap is driven primarily by a sharp rise in gold imports, which nearly doubled month-on-month despite record-high prices.
The report stated, "India's merchandise trade deficit likely widened to USD 28.0bln in Sep'25, compared to USD 26.5bln in Aug'25, driven primarily by a surge in gold imports."
The report noted that the surge in gold demand was largely fueled by the onset of the festive and wedding season, which typically boosts bullion purchases.
This increase occurred even as global commodity prices saw only a modest rise, with the CRY Index edging up to 301.78 in September from 296.64 the previous month.
In addition to gold imports, overall trade dynamics were likely affected by a delay in the US-India trade deal. The United States accounts for roughly 20 per cent of India's goods exports, and a slowdown in bilateral trade momentum could weigh on outbound shipments.
Looking ahead, the trade deficit is expected to remain elevated in the near term. Strong gold imports ahead of the festive season, firm energy demand, and continued reliance on electronics and capital goods imports are likely to keep the deficit high.
While some relief may come from softening global commodity prices and ongoing import substitution initiatives, export growth remains muted amid weak global demand and tariff-related challenges.
On the trade negotiations front, India and the US are making progress toward a potential first-phase trade agreement, with discussions expected to continue through November 2025.
Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar highlighted the importance of constructive engagement but emphasised the need to protect India's core interests.
Once implemented, reduced tariff barriers under the agreement could support a recovery in exports to the US, India's key trading partner.
So the report outlined that India's trade deficit is poised to remain under pressure in the near term due to strong import demand and limited export growth. In contrast, ongoing trade talks with the U.S. offer a potential pathway for future improvement.
The increase in the trade gap is driven primarily by a sharp rise in gold imports, which nearly doubled month-on-month despite record-high prices.
The report stated, "India's merchandise trade deficit likely widened to USD 28.0bln in Sep'25, compared to USD 26.5bln in Aug'25, driven primarily by a surge in gold imports."
The report noted that the surge in gold demand was largely fueled by the onset of the festive and wedding season, which typically boosts bullion purchases.
This increase occurred even as global commodity prices saw only a modest rise, with the CRY Index edging up to 301.78 in September from 296.64 the previous month.
In addition to gold imports, overall trade dynamics were likely affected by a delay in the US-India trade deal. The United States accounts for roughly 20 per cent of India's goods exports, and a slowdown in bilateral trade momentum could weigh on outbound shipments.
Looking ahead, the trade deficit is expected to remain elevated in the near term. Strong gold imports ahead of the festive season, firm energy demand, and continued reliance on electronics and capital goods imports are likely to keep the deficit high.
While some relief may come from softening global commodity prices and ongoing import substitution initiatives, export growth remains muted amid weak global demand and tariff-related challenges.
On the trade negotiations front, India and the US are making progress toward a potential first-phase trade agreement, with discussions expected to continue through November 2025.
Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar highlighted the importance of constructive engagement but emphasised the need to protect India's core interests.
Once implemented, reduced tariff barriers under the agreement could support a recovery in exports to the US, India's key trading partner.
So the report outlined that India's trade deficit is poised to remain under pressure in the near term due to strong import demand and limited export growth. In contrast, ongoing trade talks with the U.S. offer a potential pathway for future improvement.
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