India’s merchandise trade deficit widened to a significant three-month high of $34.68 billion in January 2026, primarily driven by a massive 19% surge in imports, particularly gold and silver. While imports touched $71.23 billion, exports remained stagnant at $36.56 billion as manufacturers struggled with global volatility and high US tariffs. Despite the current imbalance, there is growing optimism among policymakers as the US is expected to lower additional tariffs on Indian goods to 18% following an interim trade arrangement. The government maintains a positive outlook, aiming for combined goods and services exports to cross the $860 billion mark in the current fiscal year.