India’s trade deficit widened to a record in October 2025 as imports rose due to higher domestic demand after a cut in consumption tax, while exports fell due to US tariffs on the world’s fourth largest economy.
The gap between exports and imports stood at $41.68 billion last month, data released by the Ministry of Commerce and Industry showed on Monday. That compares with a $30 billion deficit forecast by economists in a Bloomberg survey. India’s trade deficit in September stood at $32.14 billion, partly on account of higher gold and oil imports.
A higher deficit is likely to add further pressure on the rupee, which has been Asia’s second-worst performing currency this year, having shed 3.5% against the dollar. The currency has weakened due to foreign outflows from stocks and uncertainty around a trade deal with the US and has been around its record low of 88.8050 to a dollar since October.
The data released Monday showed that exports fell 11.8% in October to $34.38 billion from a year earlier while imports stood at $76.06 billion, rising 16.6% from a year ago period.
A significant cut in goods and services tax, effective 22 September 2025, lifted consumption during the festive season and boosted inbound shipments, according to Bloomberg Economics, even though exports to the US suffered. Shipments to the American market dropped around 12% in September, according to the commerce ministry data.
The US imposed a 50% tariff on Indian goods in August, partly for its Russian oil buys and high tariff barriers. The latest data factors in the impact of those debilitating tariffs on India’s outbound shipments for the second straight month. Recently, the two sides have expressed optimism that a deal is on the horizon that would bring down high tariffs on India.