India's merchandise trade deficit surged to a one-year high of $39.88 billion in October 2026, according to a Reuters calculation based on government export and import data. This figure exceeded economists' expectations, who had forecast a deficit of $32.25 billion. In comparison, the trade deficit was $30.21 billion in September. Merchandise exports for October reached $49.47 billion, up from $44.40 billion in September, while imports rose significantly to $89.35 billion from $74.61 billion the previous month. Trade Secretary Rajesh Agrawal highlighted that October marked the highest-ever monthly goods exports for India, reflecting a robust performance in international trade.

The increase in imports, which saw a 16.5% rise year-on-year, has been attributed to the ongoing volatility in the global energy market, particularly due to conflicts in the Middle East. India, as the world's third-largest oil consumer, relies heavily on imports for its oil needs, sourcing nearly 85% of its requirements from abroad. The recent fluctuations in Brent crude prices, which have fallen to around $92 a barrel, provide some relief to the Indian economy amid hopes for a de-escalation in the geopolitical tensions following the US midterm elections.S2

Furthermore, India's export growth is being driven by efforts to diversify its trade markets and the establishment of new trade agreements. This year, New Delhi has successfully implemented trade deals with the UK and New Zealand, and a significant agreement with the European Union is anticipated to come into effect early next year. These developments are expected to bolster India's trade position as it navigates the challenges posed by rising import costs and global market fluctuations.S1