India’s merchandise trade deficit in September may have risen to USD 28 billion, up from USD 26.5 billion in August, as per a report by the Union Bank of India (UBI), which attributed the increase to a sharp rise in gold imports.
“India’s merchandise trade deficit likely widened to USD 28 bn in Sep ‘25, compared to USD 26.5 bn in Aug ‘25, driven primarily by a surge in gold imports,” the report stated, adding that gold imports, in fact, nearly doubled month-on-month despite record-high prices.
The report noted that the surge in gold demand was largely fueled by the onset of the festive and wedding season, which typically boosts bullion purchases, even as global commodity prices saw only a modest rise, with the CRY Index edging up to 301.78 in September from 296.64 the previous month.
Besides the impact of gold imports, overall trade dynamics were also likely affected by a delay in the finalisation of the US-India trade deal.
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The United States accounts for roughly 20 per cent of India’s goods exports, and a slowdown in bilateral trade momentum could weigh on outbound shipments.
The report’s forecast for trade deficit remains elevated in the near term as festive season demand will continue to push gold imports, energy demand will remain firm, and continued reliance on electronics and capital goods imports will also keep the deficit high.
Despite some relief expected from softening global commodity prices and ongoing import substitution initiatives, export growth will remain muted amid weak global demand and tariff-related challenges.
On the trade negotiations front, India and the US are making progress toward a potential first-phase trade agreement, with discussions expected to continue through November 2025. Both, the Commerce and Industry Minister, Piyush Goyal, and External Affairs Minister, S Jaishankar, highlighted the importance of constructive engagement but emphasised the need to protect India’s core interests.
Reduced tariff barriers may support a recovery in exports to the US, India’s key trading partner, says the report. However, it outlined that India’s trade deficit is poised to remain under pressure in the near term due to strong import demand and limited export growth.
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