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18-04-2026
Bureau Report
NEW DELHI: India’s merchandise trade deficit unexpectedly narrowed in March as a surge in exports to the US helped cushion the impact of the ongoing Iran war that has disrupted shipping routes and inflated energy costs.
The deficit fell to a nine-month low of $20.67 billion, with exports rising to $38.92 billion in March from $36.61 billion in the previous month and imports falling to $59.59 billion from $63.71 billion, data from the trade ministry showed on Wednesday.
Exports to the US Rose 17.4% month-on-month to $8.02 billion, supported by a cut in tariffs to 10% following a US Supreme Court ruling. This has helped boost shipments of textiles and engineering goods to India’s largest export market that had imposed tariffs of up to 50% on a wide swath of goods.
The trade data underscore the opposing forces shaping India’s export outlook: supply disruptions and surging logistics costs stemming from the Iran conflict and a partial revival in US demand.
While lower tariffs have bolstered shipments, exporters warn about rising freight and insurance costs, alongside severe delays near the Strait of Hormuz, a critical supply route that has been nearly blocked for a month and a half.
Negotiations between the US and Iran over the weekend failed but talks could resume this week.
“Exports to the Middle East in March dropped by $3.5 billion… this has impacted goods exports in the month,” Rajesh Agrawal, India’s trade secretary, told reporters in New Delhi, referring to the impact of Iran war on exports.
India, the world’s No. 3 oil consumer, imports more than 80% of its crude oil needs and 60% of its cooking gas, with the Middle East accounting for a large chunk of the supply.
Unlike Japan, South Korea and Taiwan, India depends on Gulf shipping routes to move its products.
Imports of crude oil and related products fell nearly 36% year-on-year to $12.18 billion in March, while gold imports declined 31.6% to $3.06 billion.
Economists had expected the overall trade deficit to widen to $32.75 billion in March, according to a media poll, compared with a deficit of $27.1 billion in February.
India estimates that services exports stood at $35.20 billion in March and imports at $16.96 billion, resulting in a surplus of $18.24 billion, according to media calculations.
Path to US trade pact
India aims to finalize an interim trade deal with the US in the coming months, a trade ministry official said, seeking tariff terms that preserve an edge over peers.
An Indian negotiating team will visit the U.S. from April 20, with in-person talks resuming after a three-four month gap following virtual engagements, another official said.
The parties will work to finalize the legal framework and timelines, while addressing issues arising from ongoing US trade investigations, the official said.
Both officials spoke on the condition of anonymity as details of the bilateral discussions are not public.
An interim trade pact framework to cut US tariffs on Indian goods to about 18% has been clouded by the Supreme Court ruling, though talks continue.
New Delhi hopes to align the trade deal with Washington’s planned changes to the so-called Section 301 tariffs in June that could reset duties on key sectors and shape market access. (Int’l Monitoring Desk)
