New Delhi: The Reserve Bank of India’s January bulletin has stated that the merchandise trade deficit of the country widened in the first month of 2026 as imports rose quicker than exports.
The trade gap expansion shows a sharper increase in inbound shipments. In the export department, performance remains uneven. While a double-digit growth was witnessed in exports to China, shipments to the US contracted in January. The pressure on the external balance increased with both gold and silver imports registering three-digit growth.
Domestic economic activity remains firm
However, domestic economic activity overcame external headwinds to remain resilient. There was a sustained momentum in January as is seen by high-frequency indicators including energy consumption, digital payments, trade and logistics.
There was a strong industrial activity and a healthy growth was noted in the services sector. Quarterly results of listed private companies revealed an aggregate sales growth, which shows the continued support from domestic demand. Also, investor sentiment improved with foreign portfolio recovering. Also, there was a turnaround in the Indian rupee, as the India–EU free trade agreement and the interim India–US trade deal infused renewed optimism.
Centre follows a credible path
When it came to the global financial sector, economic activity continued despite an increased in geopolitical uncertainty. Despite intensifying risk, high-frequency indicators signalled some growth in January. Also, the World Bank Commodity Price Index climbed to a 10-month high in January, as metal and energy prices spiked.
According to the RBI, the government has laid the bedrock of long-term growth by following a credible path of fiscal consolidation, maintaining a strong thrust on capital expenditure, and prioritising infrastructure, innovation and human capital development.