India Balance of Trade

The trade deficit in India widened to $28.4 billion in April of 2026 from $27.1 billion in the corresponding period of the previous year, the highest on record for the period and above estimates of a $27 billion gap amid a surge in imports. Imports jumped by 10% annually to $71.9 billion, the highest on record for the period, lifted by the surge in oil, fuel, and coal prices due to the war in the Middle East. The jump in foreign purchases continued to pressure the rupee, forcing the RBI to tame the currency's decline. Meanwhile, higher goods prices also lifted exports, with foreign sales rising 13.8% to $41.6 billion, the second highest reading on record and the highest for the period.

India’s trade deficit shrank to $20.67 billion in March 2026, down from $27.1 billion in February and $21.69 billion a year earlier. This figure was significantly below market expectations of $32.75 billion, marking the smallest trade gap since June 2025. The improvement came as exports rose to $38.92 billion, up from $36.61 billion in February, while imports fell to $59.59 billion, down from $63.71 billion. However, the outlook remains uncertain due to escalating geopolitical tensions in West Asia. The US military recently halted maritime trade linked to Iran, though President Donald Trump suggested that negotiations with Tehran could resume. Unlike export-driven economies such as Japan, South Korea, and Taiwan, India’s heavy reliance on Gulf shipping routes makes it particularly vulnerable to disruptions and rising costs from the ongoing conflict.

India’s merchandise trade deficit widened to $27.10 billion in February 2026, nearly doubling from $14.42 billion a year earlier but slightly below market expectations of $28.0 billion. Imports jumped 24% year-on-year to $63.71 billion, driven by purchases of gold and silver, while exports fell 0.8% to $36.61 billion. In late February, the US imposed a temporary 10% tariff on Indian goods alongside standard MFN rates, following a Supreme Court ruling that struck down earlier higher tariffs. The widening deficit also reflects rising freight costs and supply disruptions in West Asia. Exporters in sectors such as apparel and manufacturing have begun adjusting shipment schedules and exploring alternative routes to manage higher logistics costs and longer shipping times. While the latest data does not yet capture the full impact of geopolitical tensions in the Gulf, rising insurance premiums and shipping disruptions are expected to influence trade flows in the coming months.