India's trade deficit hits record $41b in Oct as exports slump

India's merchandise trade deficit widened to an all-time high of $41 billion in October, as exports registered their steepest monthly decline in over a year while imports surged on the back of higher gold, silver, and fertiliser shipments, according to official data released yesterday (17 November).

Exports fell 11.8% year-on-year to $34.4 billion in October, driven by a sharp drop in outbound shipments of engineering goods, gems and jewellery, pharmaceuticals, textiles, and chemicals. The fall was compounded by reduced shipments to the United States following the imposition of a steep 50% tariff on several Indian products.

Imports, meanwhile, rose 16.7% to $76.1 billion, fuelled largely by increased purchases of fertiliser and gold.

Commerce Secretary Rajesh Agrawal highlighted that the pace of export decline had slowed. Shipments to the US dropped 8.7% to $6.3 billion in October, an improvement from the 12% fall recorded in September, when the US tariffs first came into effect.

"After growing for four consecutive months in the current fiscal year, engineering goods exports declined sharply in October 2025, reflecting the impact of punitive tariffs imposed by the Trump administration.

"The decline in engineering goods shipments in October was expected, considering that the 50% tariff imposed by the US came into force in the last week of August," said Engineering Export Promotion Council of India Chairman Pankaj Chadha.

Federation of Indian Export Organisations President SC Ralhan said in a statement that "…export contraction mirrors the broader global economic slowdown, marked by geopolitical uncertainties, subdued demand in multiple major markets and persistent volatility in commodity prices".

Despite multiple challenges, Indian exporters have shown resilience, Agrawal noted, though high logistics costs and fluctuating input prices are still affecting competitiveness.

He said policy measures initiated by the government, including the Export Promotion Mission (EPM), interest subsidies, and steps recently announced by the Reserve Bank of India, would support exporters, particularly micro, small, and medium enterprises (MSMEs).

Detailed guidelines for the various components of the EPM would be issued within November, he said, as the government wants the benefits of the Rs25,000-crore scheme, spread over six years, to reach exporters swiftly.

However, the Global Trade Research Initiative (GTRI), a New Delhi-based economic think-tank, warned that the success of the EPM will depend on the availability of funds and smooth implementation.

The government on Wednesday cleared two schemes worth Rs45,060 crore to help exporters cope with the impact of the US tariffs. The Rs25,060-crore EPM aims to boost export competitiveness, especially for MSMEs, first-time exporters, and labour-intensive sectors.

A second initiative, the credit guarantee scheme for exporters, will ensure up to Rs20,000 crore in collateral-free credit.

"The Mission is a welcome step, but its success will depend on quickly issuing detailed guidelines, ensuring adequate funding, and building strong coordination mechanisms," said GTRI founder Ajay Srivastava.