India’s trade gap widened sharply in October, hitting a one-year high of $39.88 billion, government data released on Friday showed. Goods exports touched a record $49.47 billion. Imports rose much faster, climbing to an all-time high of $89.35 billion and overwhelming the export performance.
The deficit was well above the $32.25 billion economists had forecast in a Reuters poll, and a jump from $30.21 billion in September. It is the widest monthly gap in twelve months.
A record month for exports, and still not enough
Merchandise exports rose to $49.47 billion in October from $44.40 billion in September, a month-on-month increase of 11.4 per cent. Compared with a year earlier, exports were up 45 per cent. Trade Secretary Rajesh Agrawal said India recorded its highest-ever monthly goods exports in October, with growth spread across sectors and export destinations.
The problem is on the other side of the ledger. Imports jumped 19.7 per cent in a single month, from $74.61 billion in September to $89.35 billion in October, and were up 16.5 per cent from a year earlier. When imports grow nearly twice as fast as exports, the gap widens regardless.
In the first seven months of 2026-27, from April to October, goods exports totalled $309.06 billion, up nearly 22 per cent from a year earlier. Imports over the same period were $527.21 billion, up 16 per cent, leaving a cumulative merchandise trade deficit of $218.15 billion.
What pushed imports to a record
Energy is the biggest single pressure point. India, the world’s third-largest oil consumer, imports nearly 85 per cent of its crude oil requirements. Disruptions linked to the conflict in West Asia have pushed up crude prices, lengthened shipping routes and raised freight charges and war-risk insurance premiums.
Higher energy prices do not only widen the trade gap. They also raise input costs for businesses that rely on imported fuel and raw materials, and they can squeeze exporters’ margins.
The Reserve Bank of India has warned before that a sustained increase in energy and transportation costs could put pressure on the current account and create second-round inflationary pressures. That warning carries more weight now: October’s inflation data, released a day earlier, showed retail inflation at 6.09 per cent, above the central bank’s 6 per cent upper tolerance limit.
Services soften the picture
The merchandise numbers tell only part of the story. Services exports were estimated at $40.51 billion in October, up 15 per cent from a year earlier, while services imports were estimated at $20.72 billion, up nearly 17 per cent. Including services, India’s total exports stood at $89.9 billion in October.
The services surplus, driven largely by software and business services, continues to offset a good part of the goods deficit. The Reserve Bank will release the final services trade data later this month, which will set the current account gap for October.
In its October policy review, the central bank estimated the current account deficit at 1.2 per cent of GDP for 2026-27, projected real GDP growth of 7.1 per cent, and raised the repo rate by 25 basis points to 5.50 per cent.
Trade deals in the pipeline
New Delhi is counting on fresh trade agreements to steady the export outlook. Commerce and Industry Minister Piyush Goyal said on Friday that trade negotiations between India and the US were progressing, with only a few issues remaining unresolved.
India has already put trade agreements with the UK and New Zealand into force this year. The India-UK agreement came into force on July 15, while negotiations for the India-EU free trade agreement have concluded and the deal is expected to be implemented early next year. The US remains India’s largest export destination, while China is its biggest source of imports.
Exporters delivered their best month ever, yet the trade deficit still hit a one-year high because the import bill grew faster. Whether that gap narrows in November will depend heavily on energy prices and how quickly the pending trade deals start to move goods.
FAQs
What was India’s trade deficit in October 2026?
The merchandise trade deficit widened to $39.88 billion in October, a one-year high. It rose from $30.21 billion in September and was well above the $32.25 billion economists had forecast.
Why did the deficit widen if exports hit a record?
Goods exports reached a record $49.47 billion, up 45 per cent from a year earlier. But imports rose even faster to a record $89.35 billion, up 16.5 per cent year on year, so the gap between the two grew.
How do services change the picture?
Services exports were estimated at $40.51 billion in October, against imports of $20.72 billion. Including services, total exports stood at $89.9 billion, and the services surplus offsets much of the goods deficit.
What is driving the higher import bill?
Energy costs are the main driver. India imports nearly 85 per cent of its crude oil, and disruptions linked to the West Asia conflict have raised crude prices, freight charges and insurance premiums.
What happens next?
The Reserve Bank will release final services trade data later this month, and its monetary policy committee meets on December 2-4. Markets will also watch energy prices and progress in the India-US trade talks.
India’s exporters have shown they can deliver record months. The October data shows the harder task now is keeping the import bill from growing faster than they can sell abroad.
