While exports dropped 7.44% to $38.92 billion in March, the steepest fall in the past five months, imports declined 6.5% to $59.59 billion from the year before, according to official data released Wednesday. The trade deficit shrank to $20.67 billion, from $21.7 billion a year ago. March was the first month of the war that began February 28.
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For the full year, India’s trade deficit widened to $333.2 billion from $283.5 billion in FY25.
Commerce secretary Rajesh Agrawal said exports and imports to West Asia halved in March and that logistical challenges will continue in April. “Despite a tough year, the performance has been good. March exports are the highest (for) this year,” he said. “There were headwinds in March which brought down the numbers to some extent. We’re hopeful that the next fiscal year will be better and challenges may not sustain for long.”
Fall in Gulf Trade
March was the first month of the war in West Asia that began February 28.
For the full year, India’s trade deficit widened to $333.2 billion from $283.5 billion in FY25.Commerce secretary Rajesh Agrawal said exports and imports to West Asia halved in March and that logistical challenges will continue in April. “Despite a tough year, the performance has been good. March exports are the highest among all months this year,” he said. “There were headwinds in March which brought down the numbers to some extent. We’re hopeful the next fiscal year will be better and challenges may not sustain for long.”
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Commerce and industry minister Piyush Goyal posted on X, “A matter of great pride as India achieves record exports of $860 billion in FY26. This milestone, achieved despite global headwinds, reflects the country’s resilience and its growing strength in expanding its global trading footprint.” India’s goods exports to the Gulf dipped by 57.9% to $2.5 billion in March, while imports from the region fell 51.64% to $8.7 billion. Many ports in the region are not accessible and the conflict’s effects will persist. “Because of the logistical challenges, April will also be a tough month,” Agrawal said. However, the export sector is quick to adapt and global supply chains have been recalibrating, he said.
Imports in March fell 6.51% to $59.59 billion, from $63.75 billion in March 2025.
Overall, in FY26, India’s cumulative exports of merchandise and services grew 4.22% to $860.09 billion, from $825.26 billion in FY25. Merchandise exports in FY26 rose 0.93% to $441.78 billion, from $437.7 billion in FY25.
A spike in gold and silver prices saw their imports rise 35% in FY26 to $84 billion.
Agrawal said that goods exports rose marginally even in a year that saw several challenges, including reciprocal tariffs imposed by the US, apart from the West Asia war. He expressed hope that FY27 will be better for India with smoother trade and several free trade agreements (FTA) likely to be operationalised, helping boost prospects. The commerce secretary said the Centre aims to connect with all stakeholders, adding that special monitoring of perishable cargo is taking place. “These are not normal times on trade with the Middle East,” he said. “Our export industry is quick to adapt and whatever we can’t send to the Middle East, we can send to other markets. India’s average $6 billion monthly exports to West Asia were down to $2.5 billion in March. “Crossing $860 billion in exports is a notable achievement, particularly amid global uncertainties, supply chain disruptions, and fluctuating demand,” said SC Ralhan, president, Federation of Indian Export Organisations. “It highlights the adaptability and strength of Indian exporters.”
Engineering goods, petroleum products, electronics, pharmaceuticals, chemicals, textiles, gems and jewellery, rice and marine products were export drivers.
The US, the UAE, China, the Netherlands and the UK remained key export destinations. India resumed rice exports to China after stopping for the last two years.
While FY26 goods and services trade rose 5.4% to a record $1.84 trillion, the country’s overall trade deficit widened 26% to $119.3 billion as imports outpaced exports. India’s crude and petroleum-product imports fell 35.8% in March as Strait of Hormuz disruptions choked oil shipments.
Exporters said FY26 was marked by geopolitical tensions, shifts in trade policy by the Donald Trump administration, and logistical challenges.
“Engineering goods exports hit an all-time high of $122.43 billion in FY26 despite multiple external challenges” said Pankaj Chadha, chairman, EEPC India. “In March 2026, when one of the key sea routes was disrupted due to the West Asia conflict, engineering goods exports recorded a marginal growth of 1.1%.”
Raw material prices have seen an inflationary trend, he said.
Services, SEZs
Agrawal said that this could be the year that services overtake merchandise exports.
“Services is breathing down the neck of merchandise exports,” said an official. Services exceeded merchandise exports in the December quarter of FY26, he said.
India has notified a special economic zone (SEZ) proposed by Tata Semiconductor Manufacturing at Dholera in Gujarat, paving the way for the country’s first of five semiconductor fabrication facilities.
Tata Semiconductor Manufacturing has proposed an investment of Rs 91,000 crore for the chip fabrication unit, a cornerstone project in India’s push to build a domestic silicon ecosystem. The proposal was cleared by the board of approval chaired by the commerce secretary.
FTA
India’s trade deal with the UK is expected to come into effect in May 2026 while the India-Oman FTA expected to come into force by 1st June 2026, subject to clearances on both the sides. Work is underway to sign the India-EU FTA in calendar year 2026, with the government hoping to bring it into effect within FY27 itself. The India-New Zealand FTA expected to be signed on April 27 in New Delhi with proposed implementation within a few months.