(Bloomberg) --
India’s trade deficit widened significantly in October as imports climbed during the Hindu festival season, even though exports posted robust growth.
The gap between exports and imports stood at $27.1 billion in October, trade ministry data showed Thursday. That is higher than the $22 billion deficit forecast by economists in a Bloomberg survey and a reading of $20.78 billion in September.
Imports grew 3.9% in October from a year earlier to $66.3 billion, while exports rose 17.3% to $39.2 billion.
The widening deficit could put pressure on India’s currency, which is already near record lows, prompting the central bank to intervene in the foreign exchange market to smooth out volatility. Gold imports rose to $7.13 billion in October, from $4.39 billion the previous month, as demand picked up in the run up to the festival of Diwali, which ended about two weeks ago.
Crude oil imports increased to $18.2 billion in October from $12.5 billion in September, the data showed.
Despite the broadening gap, Commerce Secretary Sunil Barthwal told reporters in New Delhi that October has been an “extremely good month for us” because of a surge in India’s outbound shipments.
“April to October has had the highest ever non-petroleum exports from this country ever,” he said on Thursday. “Our strategy of focusing on certain sectors and certain countries is perhaps now yielding results.” These sectors include engineering goods, electronics products, chemicals and plastics, among others.
The data comes just a month after the World Trade Organization lowered its projection of global goods trade growth to 3% in 2025, from its earlier estimate of 3.3%, as a result of geopolitical tensions and policy uncertainty. The outlook may be further complicated by the return of Donald Trump to the White House, as the president-elect has repeatedly vowed to impose a 20% import tariff on all countries, and a 60% duty on goods from China.
While Barthwal on Thursday declined to comment on Trump’s proposed tariffs, he said India’s “relationship with the US can only get better” and the South Asian country’s “integration with US is growing and we are getting bipartisan support.”
The US is now India’s biggest trade partner with two-way trade of $119.7 billion in the past fiscal year, up more than a third in five years. The US’s trade deficit with India has steadily widened over the years as it shifted imports away from China. Trump’s tariff hike could cost India 0.1% of its gross domestic product by 2028, according to estimates from Bloomberg Economics.
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