India’s gold imports plunged 57.7 per cent year-on-year to $2.3 billion in August, even as the country’s overall imports rose 14.1 per cent to $70.67 billion, government data showed on Tuesday.
The sharp drop in gold purchases came as merchandise gold exports jumped 26.1 per cent to $43.81 billion, helping narrow India’s trade deficit.
India’s trade deficit stood at $26.9 billion in August, down from $31.98 billion in July, according to data released by the Ministry of Commerce and Industry on Tuesday. Economists had forecast a deficit of $32.15 billion, based on the median estimate in a Bloomberg survey.
India trade deficit beats economist estimates
India’s merchandise exports rose 26.1 per cent from a year earlier to $43.81 billion in August, significantly outpacing the growth in imports.
Imports increased 14.1 per cent to $70.67 billion during the month. The stronger export performance helped reduce the gap between the value of goods India sells abroad and those it purchases from overseas.
The narrower deficit could also provide some relief to the rupee, which has been among Asia’s weaker-performing currencies this year.
Commerce Secretary Rajesh Agrawal said demand for Indian goods remained strong across major overseas markets.
“A strong demand for Indian goods was coming from the US, the European Union and emerging markets,” Agrawal told reporters in New Delhi.
Imports, meanwhile, were supported by domestic economic activity and demand for inputs used in manufacturing. Higher energy prices also contributed to the import bill, Agrawal said.
India’s gold imports plunge 57.7% in August
One of the sharpest movements in India’s import basket came from gold.
Inbound gold shipments fell to $2.3 billion in August, down from $4.16 billion in July. Compared with August 2025, gold imports were down 57.7 per cent, falling from $5.4 billion.
The decline comes as gold prices remain elevated, raising questions about whether higher prices are beginning to weigh on India’s appetite for physical gold.
The fall also follows appeals from Prime Minister Narendra Modi for Indians to reduce gold purchases as part of efforts to contain the country’s import bill.
Gold is a major component of India’s non-essential imports, making changes in demand particularly relevant to the country’s overall trade balance.
India exports surge on US, EU and emerging-market demand
The export surge was broad-based, with engineering goods, petroleum products, chemicals and textiles among the sectors supporting growth.
The government said Indian exporters were seeing strong demand from the US, the European Union, BRICS countries and other emerging markets.
The latest monthly figures also build on a strong performance in the first five months of the financial year.
Between April and August, India’s exports increased 17.85 per cent to $215.91 billion. Imports rose 18.21 per cent to $363 billion over the same period.
The figures suggest that India’s external trade has maintained positive even as the country faces a volatile global environment.
Middle East conflict threatens India’s trade outlook
The improvement in August’s trade balance comes against a major external risk: the continuing conflict in the Middle East.
Oil prices have surged past $107 a barrel as disruptions to regional supplies have intensified. The development is particularly significant for India, which imports almost 90 per cent of its crude oil requirements.
A sustained rise in crude prices could quickly increase India’s import bill and widen the trade deficit in the months ahead. Higher energy prices could also push up inflation and the rupee, which could offset some of the advantage from stronger exports.
The risk comes after India’s economy recorded stronger-than-expected growth in the quarter ended June, supported by manufacturing and services.
Prime Minister Narendra Modi described the performance as a “herculean feat” despite oil shocks, supply-chain disruptions and global uncertainty.
For now, the August trade numbers offer a brighter picture. Exports have accelerated, the trade deficit has come in well below expectations and gold imports have fallen sharply. But the trajectory could become harder to sustain if elevated oil prices persist and disruptions to global supply chains deepen.
(With agency inputs)