Ministry of Commerce released data showing that India’s merchandise trade deficit widened to a three-month high of $34.68 billion in January 2026. This jump from $25.04 billion in December was largely driven by a massive spike in gold and silver imports, which offset a resilient performance in the services sector.
Despite the widening gap in goods, India’s overall trade (combining merchandise and services) remains on a growth trajectory, with the government optimistic about reaching a record $860 billion in total exports for the 2025–26 fiscal year.
Trade Data at a Glance: January 2026
The following table summarizes the performance of both goods and services compared to the same period last year.
| Segment | Exports (Jan ’26) | Imports (Jan ’26) | Trade Balance |
| Merchandise (Goods) | $36.56 Billion | $71.24 Billion | – $34.68 Billion |
| Services (Estimated) | $43.90 Billion | $19.60 Billion | + $24.30 Billion |
| Total (Overall Trade) | $80.45 Billion | $90.83 Billion | – $10.38 Billion |
Primary Drivers of the Widening Deficit
The sharp increase in the import bill was primarily due to high-value items and geopolitical trade pressures.
- Precious Metals Surge: Gold imports skyrocketed by 350% to reach $12 billion in January, largely due to elevated global prices rather than a massive increase in volume. Silver imports also doubled to $2 billion.
- US Tariff Impact: Exports to the United States, India’s largest market, fell by 21.7% in January to $6.6 billion. This was attributed to the final month of high (50%) reciprocal tariffs imposed by the US, which were recently negotiated down to 18%.
- Energy & Electronics: While oil imports dipped slightly (0.24%), electronics and machinery imports continued to rise, reflecting sustained demand for industrial and consumer inputs.
Bright Spots: Services and Global Demand
While the merchandise gap widened, other sectors showed significant resilience:
- Services Outperformance: Services exports grew by over 26% year-on-year, providing a vital cushion that limited the “overall” trade deficit to roughly $10.38 billion.
- Sectoral Wins: Engineering goods (up 10.37%), pharmaceuticals, and marine products recorded positive growth, signaling competitive strength in manufacturing.
- Market Diversification: While shipments to the US dipped, exports to China (up 55.6%), the UAE (up 29.3%), and Hong Kong (up 98.7%) saw dramatic increases.
“India’s exports remain northward in both goods and services. We are well-poised to cross $860 billion this year, with services expected to cross the $410 billion milestone for the first time.” — Rajesh Agrawal, Commerce Secretary.
