India's trade with the West Asian region experienced a notable contraction for the second consecutive month in April, with both exports and imports declining by over 28%, primarily due to severe shipping disruptions caused by the ongoing conflict involving the US, Israel, and Iran.
Key Points
- India's merchandise exports and imports with West Asia declined by over 28% in April, marking the second consecutive monthly contraction.
- The trade slowdown is primarily due to severe shipping disruptions caused by the conflict involving the US, Israel, and Iran, affecting the Strait of Hormuz.
- Exports to the UAE and Saudi Arabia saw significant drops, while imports from the UAE also fell, though imports from Saudi Arabia and Oman increased.
- Key sectors impacted include gems and jewellery, engineering goods, electronic items, petroleum products, and rice.
- The Indian government has implemented measures to support exporters facing challenges in this crucial market, which accounted for $178 billion in bilateral trade in 2024-25.
India's exports and imports with the West Asian region declined by over 28 per cent in April, falling for the second straight month, amid severe disruptions in ship movements following the war involving the US, Israel and Iran.
Commerce Secretary Rajesh Agrawal said that the country's merchandise exports to the West Asian region declined 28 per cent to $4.16 billion in April this year as against $5.78 billion in April last year.
Imports from the region also declined by 31.64 per cent to $10.47 billion last month from $15.32 billion in the year-ago period.
Impact on Key Trading Partners
India's exports to the UAE and Saudi Arabia contracted by 36.39 per cent to $2.18 billion and 2.89 per cent to $852 million in April, respectively.
Imports from the UAE dropped 34.63 per cent to $4.07 billion. However, from Saudi Arabia, it grew 30.29 per cent to $3.84 billion, and from Oman, it jumped by 246.42 per cent to $1.48 billion.
In March, India's exports and imports with the Middle East region plunged by over 50 per cent.
Shipping Disruptions and Economic Fallout
The joint attack against Iran launched by the US and Israel in February has led to restrictions on the movement of consignments through a key sea trading route - the Strait of Hormuz.
It is a key waterway (33 km wide) for shipments from India to the Middle East or West Asian nations that include the UAE, Oman, Iran, Bahrain and Saudi Arabia.
India normally exports goods worth about $6 billion every month to the region.
The main sectors that have recorded a dip in shipments include gems and jewellery, engineering goods, electronic items, petroleum products and rice.
Disruptions in the movement of oil and gas from the Middle East countries have also led to an increase in the prices of raw materials such as steel, plastic and rubber.
Government Measures and Future Outlook
The government has rolled out a host of measures to cushion exporters from the impact of the conflict in the Gulf region, a key market for India's exports such as gems and jewellery, rice and pharma, which were valued at about $57 billion in 2024-25.
The conflict is posing challenges for exporters to ship goods to the Gulf region, with which India had a bilateral trade of $178 billion in 2024-25 ($56.87 billion exports and $121.67 billion imports).
