India’s latest trade numbers paint a tale of two worlds—one glittering with gold and silver, the other weighed down by shrinking merchandise exports. The October merchandise trade deficit has ballooned to an all-time high of around USD 42 billion, driven almost entirely by a sudden and unusual spike in precious metal imports. Gold imports jumped nearly 200 percent year-on-year, while silver surged over 500 percent. This extraordinary build-up is the single biggest reason the deficit has widened so sharply.
The export story, meanwhile, has hit a soft patch. Merchandise exports fell sharply by nearly 12 percent from a year earlier, with petroleum products—usually a strong pillar—dropping steeply. Even though exports to the US showed signs of recovery thanks to electronics shipments, the fall in demand from other key markets overshadowed any gains. Exports to China continued to stay strong, but that alone was not enough to offset the broader slump.
Yet, beneath the noise of the headline deficit, the cumulative export performance for April–October tells a slightly more balanced story. Overall exports—goods plus services—grew by nearly 5 percent during the period, powered overwhelmingly by robust services exports. Services shipments rose almost 10 percent, touching USD 237 billion during April–October 2025. This strong momentum in India’s software and business services continues to be the economy’s steadiest cushion against global uncertainty.
The services trade surplus hit a historic high of USD 20 billion in October alone, providing critical balance to the widening merchandise gap. For the financial year so far, the surplus has climbed to USD 119 billion—a 17 percent rise. This strength is the main reason analysts still expect the current account deficit to remain manageable at around 1.2 percent of GDP for FY26, despite the gold-led shock on the goods side.
For policymakers, the October numbers are both a warning and a reminder. The warning is clear: when gold inflows spike, the trade balance can swing violently. The reminder, meanwhile, is that India’s services engine remains its most reliable stabiliser. With tariff uncertainties abroad and shifting oil dynamics due to changes in Russian supplies, the coming months may remain volatile. But the hope is that strong net services exports, along with a possible easing of trade frictions with the US, can help restore some balance to India’s external account.