Trade deficit widens to $27.14 billion in October

India’s steel consumption has also reached a seven-year high, with as much as 85.7 million metric tons used from April to October

India’s trade deficit in October widened more than analysts’ expectations as imports rose during a month that saw two festivals, despite strong growth in exports, government data released on Thursday showed.

Goods trade deficit during the month rose to $27.14 billion, far higher than the $22 billion that economists expected in a Reuters poll, and against $20.78 billion in the earlier month.

Exports during the month rose 17.26% year-on-year to $39.2 billion, while imports rose 3.88% to $66.34 billion, data showed.

In September, goods exports were at $34.58 billion, while imports stood at $55.36 billion.

Total exports for the entire fiscal (FY25) are likely to rise above $800 billion, trade secretary Sunil Barthwal said following the release of the trade numbers.

The growing trade deficit is likely to put pressure on the rupee, which is plumbing new lows. The Reserve Bank may step in to prop up the domestic currency and smoothen out volatility.

Gold imports jumped to $7.13 billion in October from $4.39 billion the previous month in the wake of Diwali.

Crude oil imports, meanwhile, rose to $18.2 billion from $12.5 billion in September.

“April to October has had the highest ever non-petroleum exports from this country ever,” Barthwal said. “Our strategy of focusing on certain sectors (such as engineering goods, electronics products, chemicals and plastics) and certain countries is perhaps now yielding results.”

The US is India’s biggest trading partner with bilateral trade of $119.7 billion in the past fiscal, up by about one-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.

Barthwal said India’s “relationship with the US can only get better” and that it “integration with US is growing and we are getting bipartisan support.”

Steel imports at 7-year high

India’s finished steel imports from April to October rose to a seven-year high as it hit 5.7 million metric tons, Reuters reported, citing preliminary government data.

A majority of these imports were made from China, which continues to be the primary supplier of rolled steel to India, the report said.

In October, steel imports rose by 0.73% to $2.15 billion, while for the April-to-October period, imports rose by 1.54% to 13.42 billion, the trade data showed.

India’s steel consumption has also reached a seven-year high, with as much as 85.7 million metric tons used during the same period.

Meanwhile, the country’s steel production has kept pace with demand, with finished steel production up by 4.4% year-on-year to 82.7 million metric tons and crude steel production rising by 3% to 84.9 million metric tons.

Even though the demand for steel has been strong domestically, India’s steel exports have been on a decline, falling to a seven-year low of 2.8 million metric tons in the April-October period, Reuters reported.

In response to rising steel imports, India’s ministry of steel is pushing for protective measures, including safeguard duties or temporary taxes, to prevent the domestic market from becoming oversaturated with foreign steel.

These proposed tariffs plan to create a balance between supporting the booming domestic demand and protecting the local steel industry from the rising imports.

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