NEW DELHI: India’s goods trade emerged relatively unscathed through the first month of the US-Iran conflict, with exports hitting a one-year high of $39 billion to help close 2025-26 (FY26) with a 0.9 per cent uptick, and the import bill shrinking 6.5 per cent sequentially and year-on-year to under $60 billion with a sharp 36 per cent drop in inbound petroleum shipments amid the Strait of Hormuz transit crisis.
While March’s outbound shipment value was 7.5 per cent lower than a year ago, it was 6.3 per cent higher than February and lifted the full-year export tally to $441.8 billion, while imports during the year rose 7.5 per cent to $775 billion. As many as 24 of India’s top 30 export products recorded a contraction in March, while about 16 products closed the year in the red.
The Commerce Ministry estimated that services exports dipped 1.2 per cent to $35.2 billion, while imports fell about 3 per cent to $17 billion in March.
Services exports are reckoned to have grown 7.9 per cent to $418.3 billion, translating into an overall uptick of 4.22 per cent in India’s export earnings at $860.09 billion.
While the headline numbers held up, trade with West Asia, a key market and import source for India, slumped in March, with exports dropping 58 per cent and imports easing by 51.6 per cent, reflecting why Commerce Secretary Rajesh Agarwal termed the crisis in the region a key challenge for trade in March.
“Because of the logistical challenges, April will also be a tough month,” he noted, referring to the inaccessibility of many ports in West Asia, before emphasising that Indian exporters are quick to adapt to challenges and supply chains around the world are seeing a reset.
The goods trade deficit cooled after sharp surges in the previous two months to $20.7 billion this March, 23.7 per cent below February’s $27.1 billion tally. Overall imports during FY26, including the estimated services numbers for March, are pegged at $979.4 billion, 6.5 per cent over FY25’s tally of $920 billion.
The lower trade gap in March would provide some respite to the current account balance in Q4 FY26, but would nevertheless likely witness a deficit to the tune of about 0.6 per cent of GDP, in contrast with the typical seasonal surplus that is seen during the last quarter of the fiscal, said Aditi Nayar, chief economist at ICRA. “Overall, India’s CAD is expected to widen to around 0.9 per cent of GDP in FY26 from 0.6 per cent in FY25, reflecting a combination of tariff-related issues and the gold price spike,” she estimated.
However, if crude oil prices average $85 per barrel this year, the rating agency expects the current account deficit to nearly double to 1.7 per cent of GDP. “This too, would be susceptible to sizeable upside risks, with every $10/barrel increase in the average crude price widening the CAD-to-GDP ratio for the fiscal by 30-40 basis points,” Nayar cautioned. One basis point equals 0.01 per cent.
Source: Business Standard
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