India's January Trade Deficit Skyrockets

India's goods trade deficit in January 2026 widened to a three-month peak of $34.68 billion, a considerable increase from $23.43 billion in the prior year. This widening gap was primarily driven by a 19% surge in imports, reaching $71.24 billion, with gold and silver being the main contributors. Gold imports alone quadrupled to $12.07 billion, and silver imports rose by 127% to $2 billion. This import surge contrasted sharply with a minimal 0.6% growth in exports, which amounted to $36.56 billion. Sequentially, exports contracted by 5.08% from December's figures.

In contrast to the goods sector's performance, India's services exports in January 2026 were estimated to reach a record high of $43.9 billion, marking a 26.3% year-on-year increase. Commerce Secretary Rajesh Agrawal noted that both merchandise and services exports have remained positive, with cumulative exports for April-January FY26 reaching $720.76 billion. He expressed optimism about nearing $860 billion in overall exports for the current fiscal year, with services contributing over $410 billion.

Economic experts pointed to the impact of US tariffs, which had previously led to a 50% levy on certain goods, though this has since been reduced to 18%. India's exports to the US saw a significant decline of 21.7% in January. The surge in goods imports, particularly gold, accounted for nearly 83% of the deficit expansion. While unit prices for gold imports increased, quantities decreased, suggesting a price-driven import value rise. The Ministry of Commerce and Industry indicated that silver import growth was influenced by both higher prices and volumes.