India’s merchandise trade deficit widened to a 3-month high of USD 34.7 bn in Jan-26 from USD 25.0 bn in Dec-25
Download ReportQuantEco Research | Jan-26 Merchandise Trade - Not all glitter is good
India’s merchandise trade deficit widened to a 3-month high of USD 34.7 bn in Jan-26 from USD 25.0 bn in Dec-25. This was driven by a jump in imports, even as exports posted a moderation. As much as 89% of the sequential deterioration in the trade deficit can be traced to gems & jewellery. This is a manifestation of the massive increase in the price of precious metals in recent months. On an encouraging note, India’s exports have maintained resilience despite unprecedented tariff uncertainty. The signing of the FTA with the EU and creation of a framework for an interim trade agreement with the US in the last three weeks are historic trade milestones for India. Over the course of the next few quarters, this will clearly help to boost India’s bilateral trade with the EU and the US. On the imports front, one needs to keep a close watch on international commodity prices, esp. crude oil, industrial metals and precious metals, all of which appear to be under the influence of geoeconomic and geopolitical uncertainties. With this as a backdrop and the multiple factors still at play, we maintain our call of India’s FY26 current account deficit at 1.3% of GDP (up from 0.6% in FY25) and project a modest reduction to 1.2% in FY27.