India’s January trade deficit widens before U.S. tariff relief kicks in

India’s merchandise trade deficit widened to a three-month high of $34.68 billion in January, marking the final month impacted by around 50% U.S. tariff on Indian exports, ‌which government officials said will be pared to 18% this week.

The wider-than-expected goods trade deficit was driven by a sharp rise ‌in gold and silver imports, which pushed up total imports by ‌12% ⁠month-on-month to $71.24 billion, while exports fell 5% to $36.56 billion, data ⁠from the commerce ministry showed on Monday (February 16, 2026).

U.S. President Donald Trump earlier this month said he would slash tariffs on Indian goods to 18% from 50%, sparking relief among exporters and policymakers. ​Mr. Trump said that India has ‌agreed to cut Russian oil purchases and intends to more than double its annual imports of U.S. goods.

A trade delegation will travel to Washington next week to finalise a trade agreement, Rajesh Agrawal, India’s ‌trade secretary, told reporters on Monday (February 16, 2026).

The two nations are currently working ​on a trade pact on the basis of an interim framework, concluded earlier this month.

Merchandise exports to the U.S., ⁠India’s largest export market, fell 4.5% month-on-month to $6.58 billion in January. Shipments to the U.S. rose to $72.46 billion in the first ten months of the fiscal ‌year, data showed.

Economists had expected the overall trade deficit to be $26 billion in January, according to a Reuters poll, compared to a deficit of $25.04 billion in the previous month.

Rise in gold imports

The rise in imports was driven by gold and silver shipments, a trade ministry official said.

Gold imports in January rose to $12.07 billion from $4.13 billion in December.

Inflows into Indian ‌gold exchange traded funds, which need to be backed by physical gold, nearly doubled ​in January to 240.4 billion rupees ($2.65 billion).

“Continued large inflows into gold ETFs, and consequent purchase/import of gold by ETFs, along with ⁠unabated imports of physical gold, may pose challenges to India’s current account deficit”, Kotak ⁠Institutional Equities said in a note on Monday.(February 16, 2026)

Government data showed that services exports in January were estimated at $43.90 billion and ‌imports at $19.60 billion, suggesting a services trade surplus of $24.30 billion, according to Reuters’ calculations.

India’s central bank releases detailed monthly services trade data about two ​weeks after the government’s initial estimates.