India's gold imports plunged by 81.3% in September 2026, reaching their lowest level in 30 months at $1.8 billion. This sharp decline helped narrow the country's merchandise trade deficit, even as imports of crude oil and electronic goods increased. According to data from the commerce ministry and analysis by the ratings agency ICRA, the current account deficit (CAD) is expected to widen slightly but remain manageable in the coming fiscal year.
- Gold imports fell 81.3% year-on-year to $1.8 billion in September 2026.
- Merchandise trade deficit narrowed to $30.2 billion in September from $33 billion a year earlier.
- Exports rose 23% year-on-year to $44.4 billion in September.
- Imports increased 8% to $74.6 billion, driven by crude oil and electronics.
- ICRA forecasts the current account deficit to widen to 0.9% of GDP in FY27.
Why Did Gold Imports Fall So Sharply in September?
Gold imports dropped significantly by 81.3% compared to the same month last year, falling from $9.6 billion to $1.8 billion. This decline was even steeper than the 57.7% fall recorded in August. The reduction in gold imports helped offset the increased spending on other imported goods, especially crude oil and electronic products.
How Did This Affect India's Trade Deficit?
The sharp fall in gold imports contributed to narrowing the merchandise trade deficit to $30.2 billion in September 2026, down from $33 billion in September 2025. Despite this improvement, the overall merchandise trade deficit widened to $177.6 billion in the first half of FY27, compared to $156.9 billion in the same period last year.
What Trends Were Seen in Exports and Other Imports?
Merchandise exports grew by 23% year-on-year to $44.4 billion in September. Imports rose by 8% to $74.6 billion, mainly due to higher crude oil and electronic goods purchases. Oil imports increased from $14 billion to $18.3 billion, while electronic goods imports rose from $9.8 billion to $14.9 billion.
What Is ICRA's Outlook on the Current Account Deficit?
ICRA expects the current account deficit to widen to 0.9% of GDP in FY27, up from 0.7% in FY26. This forecast assumes an average crude oil price of around $90 per barrel in the second half of FY27. The agency also predicts the CAD to increase to $13-15 billion in the July-September quarter, partly due to a slowdown in remittance inflows.
How Will India Finance the Widening Current Account Deficit?
Despite the expected widening of the CAD, ICRA believes it will remain manageable. The Reserve Bank of India's measures to attract foreign capital, including encouraging Foreign Currency Non-Resident (Bank) deposits, are expected to bring in sizeable capital inflows. These inflows should be sufficient to finance the projected deficit.
Frequently Asked Questions
Q: What caused the decline in gold imports in September 2026?
A: The decline was due to reduced demand and possibly higher prices, leading to an 81.3% year-on-year drop to $1.8 billion, the lowest in 30 months.
Q: How did the fall in gold imports affect India's trade deficit?
A: The fall helped narrow the merchandise trade deficit to $30.2 billion in September 2026, despite increases in crude oil and electronic goods imports.
Q: What is the expected current account deficit for FY27?
A: ICRA forecasts the current account deficit to widen to 0.9% of GDP in FY27, assuming crude oil prices average around $90 per barrel in the second half of the fiscal year.
Q: Will India be able to finance the wider current account deficit?
A: Yes, sizeable capital inflows supported by RBI's measures to attract foreign funds are expected to be sufficient to finance the projected deficit.
