India's exports plunge 7.44% in March; trade with West Asia nosedives

India's exports saw a significant 7.44 per cent decline in March, primarily driven by a more than 50 per cent contraction in trade with West Asia amidst escalating geopolitical tensions and global trade uncertainty, even as overall fiscal year exports hit a record high.

Exports posted the steepest fall in five months, declining by 7.44 per cent in March to $38.92 billion due to trade uncertainty and geopolitical tensions, with shipments to West Asia contracting by more than 50 per cent 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 per cent to $59.59 billion in March, driven by a significant decline in inbound shipments of crude oil and gold, the data showed.

Fiscal Year Performance and Global Challenges

For the full 2025-26 fiscal year, exports grew 0.93 per cent to an all-time high of $441.78 billion, while imports rose 7.45 per cent 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 per cent 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 per cent in March, while imports from the Gulf nations fell by 51.64 per cent.

"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.

Impact on Key Imports and Trade Partners

Crude oil imports in March dipped 35.91 per cent to $12.18 billion, while in 2025-26, it declined 6.37 per cent to $174 billion.

Gold imports in March dipped 31.63 per cent to $3.06 billion, while in 2025-26, these rose by 24 per cent 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 per cent to $87.3 billion during the last fiscal, while imports increased 15.95 per cent 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.