India's trade deficit might have surged to $28B in September
What's the story
India's merchandise trade deficit is projected to have widened to $28 billion in September 2025, from $26.5 billion in August, a report by Union Bank of India has said. The widening gap is mainly due to a sharp increase in gold imports, which nearly doubled month-on-month despite record-high prices. The rise in demand was largely driven by the festive and wedding season.
Market dynamics
Global commodity prices saw only a modest increase
The surge in gold imports occurred even as global commodity prices saw only a modest increase. The CRY Index rose slightly to 301.78 in September from 296.64 last month. Further, the delay in the US-India trade deal is also expected to have an impact on overall trade dynamics, with the US accounting for nearly 20% of India's goods exports.
Forecast
Trade deficit expected to stay high in near term
The trade deficit is expected to stay high in the near term. Strong gold imports ahead of the festive season, robust energy demand, and continued dependence on electronics and capital goods imports are likely to keep it elevated. However, some relief could come from easing global commodity prices and ongoing import substitution efforts. Export growth remains subdued due to weak global demand and tariff-related challenges.
Trade talks
India, US making headway toward trade agreement
On the trade negotiations front, India and the US are making headway toward a possible first-phase trade agreement. The discussions are likely to continue through November 2025. Commerce Minister Piyush Goyal and External Affairs Minister S Jaishankar have stressed the importance of constructive engagement while safeguarding India's core interests. If implemented, lower tariff barriers under this deal could help revive exports to the US, India's key trading partner.