October 12, 2025

Get ready for a trade tale with a golden twist! India’s merchandise trade deficit soared to a staggering USD 28.0 billion in September 2025, jumping from USD 26.5 billion in August, reveals a fiery report by Union Bank of India. What caused this jump? Blame it on skyrocketing gold imports! Despite gold prices being at record highs, demand nearly doubled month-on-month, thanks to the upcoming festive and wedding season, when everyone rushes to buy gleaming bullion. The report clearly states, "India's merchandise trade deficit likely widened to USD 28.0bln in Sep'25, compared to USD 26.5bln in Aug'25, driven primarily by a surge in gold imports." Even though global commodity prices only nudged up a little, with the CRY Index inching from 296.64 to 301.78, the gold craze was intense. But wait, there’s more! The trade story also faces a hiccup from delay in the US-India trade deal. The US is a big buyer, taking about 20% of India’s exported goods. A slowdown in talks means India’s shipments overseas aren't growing fast. Looking ahead, don’t expect the trade deficit to cool off soon. Strong gold buying before festivals, steady energy needs, and heavy imports of electronics and capital goods are bubbling up the deficit. Some light may come from easing global commodity prices and India’s push to make more products locally. Yet, exports remain shy, scared off by weak global demand and some pesky tariffs. The good news? India and the US are steadily inching towards a first-phase trade agreement, with talks set to roll through November 2025. Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar both underscore the need to stay firm on India’s core interests while keeping the discussion positive. Once tariffs drop under this new deal, Indian exports to the US could get a much-needed boost. So, in short, India’s trade gap is currently under fire due to strong imports and slow export growth. But with ongoing trade talks with the US, there’s a shiny hope on the horizon for better days ahead!

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Tags: India trade deficit, Gold imports, Us-india trade deal, Merchandise trade, Export growth, Import demand,