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

India’s goods trade deficit widened to $34.68 billion in January, a three-month high; This marked the latest month affected by a nearly 50% U.S. tariff on Indian exports that government officials said would be reduced to 18% this week.

The wider-than-expected goods trade deficit was driven by a sharp increase in gold and silver imports, according to data released by the commerce ministry on Monday, February 16, 2026; This increased total imports by 12% monthly to 71.24 billion dollars, while exports decreased by 5% to 36.56 billion dollars.

US President Donald Trump earlier this month said he would reduce tariffs on Indian goods from 50% to 18%, creating relief among exporters and policymakers. Mr. Trump said India had agreed to reduce its oil purchases from Russia and plans to more than double its annual imports of U.S. goods.

A trade delegation will travel to Washington next week to finalize a trade deal, Indian commerce minister Rajesh Agrawal told reporters on Monday, February 16, 2026.

The two countries are currently working on a trade agreement based on an interim framework signed earlier this month.

⁠Goods exports to the USA, India’s largest export market, decreased by 4.5% monthly to $6.58 billion in January. Data showed that shipments to the United States rose to $72.46 billion in the first ten months of the fiscal year.

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

Increase in gold imports

A commerce ministry official said the increase in imports was due to gold and silver shipments.

Gold imports in January increased from 4.13 billion dollars in December to 12.07 billion dollars.

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

“Continued large inflows into gold ETFs and resulting purchases/imports of gold by ETFs and unabated physical gold imports 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 were estimated at $43.90 billion in January, while imports were estimated at $19.60 billion; This means a services trade surplus of $24.30 billion, according to Reuters calculations.

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