India’s merchandise exports fell 11.8% in October on a strong base, while shipments to the US declined 8.5%, as exporters faced hefty additional tariffs of 50% in the biggest market, according to official data released on Monday. Trade deficit widened to a record high of $41.68 billion in the month, as a surge in imports of high-priced gold during the festive season led to a spike in the import bill for the yellow metal to $14.72 billion from $4.92 billion in the year-ago month.
Some of the decline in exports in October was due to the high base of October 2024, Commerce Secretary Rajesh Agrawal said. The October exports to the US at $6.31 billion were higher than in September — the first month of the application of 50% additional tariffs — when the shipments were at $5.47 billion as against $6.21 billion in September 2024.
Merchandise exports to the US recorded a 14.5% rebound from September and the first month-on-month rise since May. For April-October, exports to the US are up 10.14% to $52.12 billion. Though traditional sectors such as gems & jewellery and marine products have seen a decline in the US market, support was provided by sectors like electronic goods, engineering, drugs and pharma, chemicals, and textiles. Overall electronic exports were up 19.05% to $4.08 billion.
The 200% increase in imports of gold were matched by the 528% rise in silver imports to $2.72 billion from $432 million in October 2024. Gold and silver pushed up merchandise imports by 16.68% to $76.06 billion. Merchandise exports during the month were down 11.80% to $34.38 billion. Services exports outperformed goods exports and were up 11.94% to $38.52 billion in October. It is the second time after December 2024 that services exports have performed better than goods exports. Imports of services during the month grew 8.18% to $18.64 billion.
The government and the Reserve Bank of India last week announced measures to bring down the cost of credit to exporters and help them with marketing and logistics. Agrawal said these measures would give hope to exporters, especially smaller exporters. “We will have a good November,” he added.
“The trade deficit is expected to cool somewhat in November-December 2025 from the October levels on account of an anticipated sequential dip in gold imports, as well as some pickup in exports after the festive period ends. Nevertheless, the current account deficit appears set to widen materially to 2.4-2.5% of GDP in Q3FY26 (October-December) from the 1.8% expected in Q2FY26 (July-September,” Chief Economist at Icra Aditi Nayar said.
Among products, there was a sharp 16.71% decline in engineering exports to $9.37 billion in October. Engineering products account for more than a quarter of merchandise exports. Petroleum products exports fell 10.51% to $3.94 billion while plastics exports fell 21.59% to $632 million.
Exports of gems and jewellery declined 29.50% to $2.29 billion while readymade garments shipments were down 12.88% to $1.07 billion. Chemical exports were down 1.02% to $2.14 billion while pharma exports contracted 5.15% to $2.48 billion. Cotton yarn and fabrics exports declined 13.31% to $906 million. Contraction was also seen in rice exports and plastics. Exports of marine products — one of the sectors hit the most by the US tariffs — were up 11.08% to $899 million.
Despite the October shock, the merchandise exports in the first seven months of the fiscal have shown a growth. In April-October, goods exports were up 0.83% to $254.25 billion while imports were up 6.37% to $451.08 billion. Services exports in April-October were up 9.75% to $237.55 billion while imports grew 3.40% to $118.87 billion.
