India’s trade deficit at 12-month high as October imports hit record | Economy & Policy News

India’s trade deficit widened to a 12-month high of $39.88 billion in October as merchandise imports rose to a record high of $89.35 billion. India’s exports were also at an all-time high of $49.47 billion in October, up 45 per cent year-on-year (Y-o-Y).

The rise in imports and widening of the deficit are likely seasonal trends, as India had recorded a trade deficit of $42.58 billion in October last year, with imports at the then-record high of $76.69 billion.

Cumulatively, goods exports were $309.06 billion in April-October, up nearly 22 per cent Y-o-Y. Imports were 16 per cent higher Y-o-Y at $527.21 billion in the first seven months of financial year 2026-27 (FY27). As such, the trade deficit stood at $218.15 billion in the seven-month period.

The commerce department estimated India’s services exports at $40.51 billion in October, up 15 per cent Y-o-Y, while services imports were estimated to have risen nearly 17 per cent Y-o-Y to $20.72 billion.

This resulted in an estimated services trade surplus of $19.79 billion. The Reserve Bank of India (RBI) is expected to release the final data on services trade later this month.

The robust growth in exports is likely to help India meet the $1-trillion total exports target, including both merchandise and services, set by the government for the current financial year.

The strong growth in goods exports has also increased their contribution to gross domestic product (GDP) after the share of exports recorded a consistent decline in the last three financial years. Exports accounted for 14 per cent of GDP in the first quarter (Q1) of FY27, according to the latest available data.

Following a slowdown in global demand in FY24 and FY25, and steep US tariffs on Indian goods in FY26, the share of exports in GDP fell to 11.3 per cent in FY26 from 11.7 per cent in FY25 and 12.5 per cent in FY24. At 14 per cent of GDP in Q1FY27, the share of exports has recovered to the level seen in FY23 — a year when annual goods exports were at a record high.