India’s merchandise trade gap is set to widen in September 2025, a Union Bank of India report says, rising to about US $28 billion from $26.5 billion in August. The jump is mainly due to a sharp increase in gold imports that almost doubled month‑on‑month despite record‑high prices.
Festive and wedding season spikes in demand usually boost bullion purchases, and that trend is driving India’s big gold imports this quarter. Even though global commodity prices have only edged up modestly—CRY Index moved to 301.78 from 296.64 last month—gold keeps pulling the bulk of the boost.
Gold isn’t the only factor. Overall trade flows can also be affected by delays in the U.S.–India trade deal. The United States supplies about 20 % of India’s goods exports, so any slowdown in this partnership could weigh on outbound shipments.
Looking ahead, the trade deficit is likely to stay high in the near term. Strong gold imports before holiday celebrations, steady energy demand, and continued reliance on imported electronics and capital goods will keep the gap large. While softer global commodity prices and import‑substitution initiatives may ease the pressure, export growth remains muted amid weak global demand and tariff hurdles.
India and the U.S. are working on a first‑phase trade agreement, with talks expected to continue into November 2025. Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar stressed constructive engagement while protecting national interests. If the agreement moves forward, reduced tariff barriers could give a boost to India’s exports to the U.S.—its key trading partner.
In short, India’s trade deficit faces short‑term pressure from strong imports, especially gold, and limited export growth. But ongoing trade negotiations with the U.S. could offer a pathway to improvement in the future.
Source: aninews
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