Exports fall 7.4% in March on West Asia shock; trade deficit narrows to 9-month low

Exports posted the steepest fall in five months, declining by 7.44% in March to $38.92 billion due to trade uncertainty and geopolitical tensions, with shipments to West Asia contracting by more than 50% in the month, according to official data released on Wednesday.

The trade deficit, however, narrowed to a nine-month low of $20.67 billion in March on account of lower imports.

Imports dipped by 6.51% to $59.59 billion in March, driven by a significant decline in inbound shipments of crude oil and gold, the data showed.

For the full 2025-26 fiscal year, exports grew 0.93% to an all-time high of $441.78 billion, while imports rose 7.45% to $775 billion. The trade deficit ballooned to $333.2 billion due to a jump in gold and silver imports during the last fiscal.

Commerce Secretary Rajesh Agrawal told reporters that the country's goods and services exports increased by an estimated 4.22% to an all-time high of $860.09 billion in 2025-26 against $825.26 billion in 2024-25.

He said that despite global challenges, Indian exporters are showing resilience and are registering positive growth.

"We are hopeful that 2026-27 will be a much better year," he said.

The secretary said that India's exports to the Middle East region fell by 57.95% in March, while imports from the Gulf nations fell by 51.64%.

"Our exports to the Middle East in March dipped by 3.5 billion dollars (USD) and it has impacted (overall) exports," Agrawal told reporters.

Agrawal said that April could also be a tough month for exports due to the conflict, which is hampering ship movements in international waters.

Crude oil imports in March dipped 35.91% to $12.18 billion, while in 2025-26, it declined 6.37% to $174 billion. Gold imports in March dipped 31.63% to $3.06 billion, while in 2025-26, these rose by 24% to $71.97 billion.

The war in the Middle East has disrupted the flow of oil and gas through the Strait of Hormuz, pushing up freight and insurance costs for exporters.

"We hope the challenges that we face today will not sustain for long, and we may have smoother trades across the world in months to come," the secretary said.

Services exports, the secretary said, have remained robust.

Meanwhile, China has overtaken the US to emerge as India's largest trading partner in 2025-26, with bilateral trade reaching $151.1 billion, while the country's trade deficit with Beijing widened to $112.16 billion during the period, government data showed.

The US was India's largest trading partner for the four consecutive year till 2024-25.

The country's outbound shipments to the US grew marginally 0.92% to $87.3 billion during the last fiscal, while imports increased 15.95% to $52.9 billion. The trade surplus declined to $34.4 billion in 2025-26 from $40.89 billion in 2024-25.

The secretary said that energy imports from the US, including LPG, have gone up.

He added that despite global challenges, India's exports have remained in positive territory in 2025-26.

Free trade agreements that India will implement this year will provide opportunities for domestic exporters.

While the India-UK trade pact is expected to come into force from May, the trade deal with Oman may be implemented in June.

(Except for the headline, Fortune India has not edited the content of this PTI report.)