The US-Israel war with Iran and the resultant blockade of the Strait of Hormuz, a key waterway, caused India’s merchandise exports to fall 7.4% year-on-year to $38.92 billion in March; shipments to the West Asian region dropped by 58%. With imports also declining by 6.5% to $59.59 billion in the month, India’s overall foreign trade in goods compressed, resulting in a relatively low trade deficit of $20.7 billion.
Exports of goods contracted for the first time since October 2026, though shipments have been tepid in most recent months.
“Our exports to West Asia in March went down by $3.5 billion. Normally, monthly exports to the region are around $6 billion but this March only $2.5 billion worth of exports went. In percentage terms, it has been a decline of 57.9%,” Commerce Secretary Rajesh Agrawal told reporters.
Regional Shockwaves
He said the government is hopeful that 2026-2027 will be much better in terms of trade. “We hope the challenges we face today will not sustain for long. The Free Trade Agreements (FTAs) coming into effect would also aid exports,” he added.
ALSO READWheat procurement down 70% as key states get cold feet
Exports in March to the United Arab Emirates (UAE), the second-biggest market for India, declined by 61.9% to $1.29 billion. Exports to Saudi Arabia were down 45.6% to $ 527.8 million.
Along with exports, imports from the region also declined sharply by 51.6% year-on-year to $8.7 billion.
Despite US tariffs and the war in West Asia, overall exports (goods and services combined) crossed $860 billion in 2025-26, achieving 4.2% growth. Merchandise exports in 2025-26 were up 0.9% year-on-year to $441.78 billion, while services exports grew 7.9% to $418.31 billion. Overall imports last financial year were up 6.4% to $979.40 billion. Merchandise imports were up 7.4% to $ 774.98 billion while services imports grew 2.8% to $ 204.42 billion.
Sectoral Divergence
Barring the engineering sector, which saw a 1.1% increase in exports to $10.9 billion in March, all key sectors recorded a decline. Electronics exports were down 3.28% to $4.4 billion, pharma exports were down 23.1% to $2.82 billion, and gems and jewellery exports contracted 29.4% to $2.04 billion. Garment exports contracted 18.9% to $ 1.24 billion.
In 2025-26 engineering exports expanded 4.8% to $ 122.4 billion, electronics exports were up 24.4% to $ 47.9 billion, pharma exports grew 2.1% to $ 31.1 billion, gems and jewellery exports contracted 5.4% to $ 28.2 billion while petroleum product exports were down 14.9% to $ 53.9 billion.
ALSO READYouth unemployment hits 9-month high of 15.2% in March
During 2025-26 gold imports grew 24.1 % to $ 71.9 billion, electronics goods imports were up 17.7% to $ 116.1 billion and petroleum imports were down 6.3% to $ 173.9 billion.
For 2025-26 the merchandise trade deficit was $ 333.2 billion, with China alone contributing $ 112.15 billion. The elevated US tariffs and higher energy imports brought down the trade surplus with the US to $34.4 billion from $40.88 billion in 2024-25.
TOPICSexportsThis article was first uploaded on April fifteen, twenty twenty-six, at forty-three minutes past eleven in the night.