India’s widening goods trade deficit in October has raised concerns among analysts, as Nuvama Research said the country’s rising gold imports must be tracked closely to understand how the trade gap could move in the coming months. The firm said weak global trade trends and India’s gold import pattern will continue to be key monitorables.
The report stated “global trade trends (with early signs of a slowdown) as well as India’s gold import trajectory shall be key monitorables for assessing the trade deficit path”.
Trade data released on Monday showed that India’s goods trade deficit expanded sharply to a record $42 billion in October, compared with $32 billion in September. India’s gold imports rose 199 per cent year-on-year to $14.7 billion from $4.92 billion, rising three times over the past three months.
This rise was mainly driven by a steep widening of $7 billion in the gold deficit, while the oil deficit also widened by $2 billion to $11 billion during the month. Gold deficit has widened three times in the last three months, reaching $17 billion, showing a significant jump in imports amid elevated global prices. The core deficit, which excludes oil and gold, also widened, rising to $14 billion in October from $13 billion in September.
Prices of gold are hovering around Rs 1.29 lakh per 10 grams in the national capital.
This came even as the electronics deficit improved slightly to $5.5 billion from $6.7 billion in September, although deficits in chemicals, ores and engineering goods expanded in the same period.
On the export side, merchandise shipments contracted sharply by 11.8 per cent year-on-year in October, compared with 6.7 per cent growth in September. Goods exports fell to $34.4 billion last month from $38.9 billion in October 2024, while imports rose to $76.1 billion from $65.2 billion over the same period.
Nuvama Research said that with global trade showing early signs of slowing, India’s gold import trajectory will be crucial in assessing how the trade deficit changes, especially as elevated gold inflows continue to create pressure on the country’s external balances.
India is the world’s second-largest gold consumer after China, and imports mainly support demand from the jewellery industry.
Gems and jewellery exports last month declined 29.5 per cent year-on-year to $2.3 billion.
