FX.co ★ India’s Trade Deficit Widens Sharply Amid Rising Imports

India’s merchandise trade deficit widened sharply to $34.68 billion in January 2026, up from $23.43 billion a year earlier and far exceeding market expectations of $26 billion. It was the largest gap since October’s record deficit of $41.68 billion and came just weeks before New Delhi concluded an interim trade agreement with the US designed to reduce tariffs. Imports climbed 19.2% year-on-year to $71.24 billion, propelled mainly by higher purchases of gold and silver, while exports inched up only 0.6% to $36.56 billion. Earlier this month, US President Donald Trump announced that tariffs on Indian goods would be cut to 18% from 50%, providing relief to exporters and policymakers. Under the agreement, India has pledged to scale back imports of Russian oil and aims to more than double its annual purchases of US goods. The deal follows a trade pact with the EU and underscores India’s broader strategy to deepen trade relations with major global partners.