India’s Merchandise Trade Deficit Widens to $39.88 Billion Despite Record Exports
Key Facts
India’s merchandise trade deficit widened to $39.88 billion in October 2026, from $30.21 billion in September, as imports grew faster than exports, according to data reported by Moneycontrol. The deficit widened despite exports reaching a monthly record, highlighting the impact of higher imports on the trade balance during the month. Merchandise exports totaled $49.47 billion, while imports reached $89.35 billion. Year on year, the deficit was below the $42.58 billion recorded in October 2025. The trade data coincided with consumer price inflation rising to 6.09% in October, according to India’s Ministry of Statistics and Programme Implementation.
The monthly figures show that record export value did not prevent the gap between India’s merchandise sales and imports from widening. Imports rose to $89.35 billion in October, compared with exports of $49.47 billion, resulting in a wider deficit than in the previous month. Moneycontrol said imports growing faster than exports drove the widening compared with September. The year-on-year comparison, however, paints a different picture: the October 2026 deficit of $39.88 billion was below the October 2025 level of $42.58 billion. The report therefore combines a monthly deterioration in the trade balance with an annual improvement in the size of the deficit.
Over the seven months from April to October 2026, India’s merchandise exports rose 22% year on year to $309.06 billion. Imports increased 16.4% over the same period to $527.21 billion, according to figures reported by Moneycontrol. The cumulative figures show exports growing faster than imports, while the value of imports remained much higher than that of exports. October alone, meanwhile, showed that faster import growth during the month lifted the deficit compared with September. The difference between the periods remains important when reading the figures: the seven-month total does not erase the widening of the monthly deficit in October.
On prices, India’s consumer price inflation reached 6.09% year on year in October 2026, compared with 5.54% in September, according to the Ministry of Statistics and Programme Implementation. The ministry said October’s reading was provisional, while September’s was final. Food price inflation rose to 8.94% in October from 7.74% in September, according to the index published by the ministry. Food inflation thus recorded a larger annual increase than the overall index during the month. These figures provide economic context alongside the trade data, without the ministry linking them to movements in the trade balance.
The U.S.-India trade track is based on a framework for an interim agreement announced in a joint statement issued on February 6, 2026, according to a report by the Office of the U.S. Trade Representative. The framework sets a reciprocal U.S. tariff of 18% on categories of Indian goods. It also provides for the possibility of removing tariffs on a wide range of products, including generic medicines, gems and diamonds, and aircraft parts, if the interim agreement is successfully concluded, according to the U.S.-India statement. The available open-source evidence does not provide documented details confirming the specific offer of tariff preference for India compared with Vietnam, Indonesia and Cambodia. The benefits cited in the press report therefore remain unconfirmed here, while the announced framework sets out existing tariff terms that are conditional on completing the agreement.
The background to the tariffs lies in additional U.S. measures announced in 2026. In July, the Indian government said an additional 10% tariff had been imposed on Indian imports under measures related to forced labor, after an initial proposal of 12.5%. New Delhi estimated that 45% of its exports to the United States would remain outside the scope of the tariff, while the remaining 55% would be subject to it. The government said the exemptions made India’s tariff burden relatively lower than that of most other economies covered by the investigation. It also noted, however, that the mechanism for textiles under the final measures had not yet been established.
On October 15, India’s trade official said the first phase of the agreement between the two countries had been finalized and was undergoing legal drafting. He added that India was seeking preferential access to the U.S. market and greater tariff stability, Reuters reported via Investing.com. The background to the tariff change is a reduction from levels that reached 50% on most Indian goods in August 2025 to 18% under the February 2026 framework, according to the Associated Press. In bilateral trade, the U.S. goods trade deficit with India was $45.7 billion in 2024, up 5.1%, or $2.2 billion, from 2023, according to the Office of the U.S. Trade Representative. India’s Ministry of Statistics is scheduled to release the November 2026 consumer price index on December 14, 2026, or on the next working day if the date falls on a holiday.