India's Merchandise Trade Deficit Widens As Imports Outpace Exports

(MENAFN- KNN India) New Delhi, Feb 21 (KNN) India's Reserve Bank of India reported that the country's merchandise trade deficit widened in January 2026, as the value of imports grew faster than exports, according to its latest bulletin.

The expansion in the trade gap reflected a sharper rise in inbound shipments even as export performance remained uneven, the central bank noted in the State of the Economy chapter.

Imports Grow Faster Than Exports
Data released for the month showed that merchandise imports surged significantly, driven in part by higher shipments of gold, silver and other commodities, while exports experienced more modest growth.

According to government figures, the merchandise trade deficit widened to approximately USD 34.68 billion in January 2026, up from around USD 25 billion in December, as imports rose about 19 percent compared with relatively flat export growth.

Shipments to China continued to expand at double-digit rates, while exports to the United States declined during the month, the RBI observed, highlighting persistent unevenness across key trading partners.

External Sector Pressures Amid Robust Domestic Activity
The central bank noted that gold and silver imports registered sharp triple-digit growth, adding pressure on the external balance, though specific bullion figures vary by source.

Despite these external headwinds, the RBI said domestic economic activity remained resilient, citing sustained momentum in high-frequency indicators such as industrial production, digital payments, and logistics. Investor sentiment improved, and the Indian rupee saw renewed strength following optimism around recent trade agreements with the European Union and the United States, the bulletin noted.

Global Economic Context
On the global front, overall economic activity held up in January despite heightened geopolitical uncertainty, including conflicts in multiple regions, which was reflected in a rising geopolitical risk index, the RBI added.

The widening merchandise trade deficit underscores ongoing pressures in the external sector even as domestic growth drivers, such as consumption, investment and services, remain intact.

(KNN Bureau)

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