India's merchandise trade deficit widened to $34.68 billion in January, a three-month high. This was the last month affected by nearly 50% U.S. tariffs on Indian goods, which the government said will be cut to 18% this week. Imports grew 12% from December, reaching $71.24 billion, largely due to a sharp rise in gold and silver imports. Gold imports alone soared to $12.07 billion, up from $4.13 billion in December. Meanwhile, exports fell 5% to $36.56 billion, according to data released by the commerce ministry on February 16, 2026. U.S. President Donald Trump announced tariff cuts to 18%, down from 50%, bringing relief to Indian exporters and officials. Mr. Trump also said India agreed to cut Russian oil purchases and plans to more than double U.S. goods imports. A trade delegation is set to visit Washington next week to finalize a trade agreement, said Rajesh Agrawal, India's trade secretary. Exports to the U.S., India's largest export market, dropped 4.5% to $6.58 billion in January. However, shipments to the U.S. have totaled $72.46 billion in the first ten months of the fiscal year. Economists expected a $26 billion trade deficit, but the actual figure was wider due to heavy gold imports and lower exports. Gold imports rose notably as inflows into Indian gold ETFs doubled in January, reaching 240.4 billion rupees ($2.65 billion). Kotak Institutional Equities warned that "continued large inflows into gold ETFs, and consequent purchase/import of gold by ETFs, along with unabated imports of physical gold, may pose challenges to India’s current account deficit." Government data also showed January services exports estimated at $43.90 billion and imports at $19.60 billion, suggesting a strong services trade surplus of $24.30 billion. The central bank will release more detailed data soon.