October 14, 2025
The increase was mainly driven by a sharp jump in gold imports, which nearly doubled month-on-month
Festive and wedding season demand significantly boosted gold purchases despite record-high prices
The CRY Index, tracking global commodity prices, rose modestly to 301.78 in September from 296.64 in August
Trade momentum was further affected by delays in the US–India trade agreement, impacting exports
India’s merchandise trade deficit is estimated to have widened to US$28.0 billion in September 2025, compared with US$ 26.5 billion in August, according to a report by Union Bank of India. The rise in the trade gap was largely attributed to a sharp surge in gold imports, which nearly doubled month-on-month despite historically high prices.
The report noted that the increase in gold demand was driven by the start of the festive and wedding season, a period that traditionally boosts bullion purchases across the country. This surge came even as global commodity prices saw only a marginal uptick, with the CRY Index edging up to 301.78 in September from 296.64 in August.
Besides gold, the report indicated that overall trade dynamics were influenced by delays in finalising the US–India trade deal. The United States accounts for roughly 20 per cent of India’s goods exports, and any slowdown in bilateral trade momentum could weigh on outbound shipments in the coming months.
Looking ahead, the report projected that the trade deficit will remain elevated in the near term. Persistently strong gold imports ahead of the festive season, firm energy demand, and ongoing reliance on electronics and capital goods imports are expected to keep pressure on the deficit.
Some respite may emerge from softening global commodity prices and domestic import substitution initiatives, but export growth is likely to stay subdued amid weak global demand and tariff-related hurdles.
On the trade negotiations front, India and the US are continuing talks on a first-phase trade agreement, with discussions expected to extend through November 2025. Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar have emphasised that while India remains committed to constructive engagement, it will continue to protect its core national interests.
If successfully implemented, reduced tariff barriers under the agreement could help revive exports to the US, India’s largest trading partner. However, the Union Bank report concluded that, for now, the trade deficit is set to remain under pressure, reflecting strong import demand and constrained export performance.
Source: Economic Times