India’s trade deficit narrowed in March as shipments to and from the Middle East were disrupted by the Iran war, which has severely damaged energy assets and choked supplies through a vital shipping route.
The gap between exports and imports stood at $20.67 billion in March from $27.1 billion in February, data released by the Ministry of Commerce and Industry showed April 15. That compares with a $28.5 billion deficit forecast by economists in a Bloomberg survey.
Imports fell 6.5% in March to $59.59 billion from a year earlier, while exports fell 7.4% to $38.92 billion.
The data captures the first full month of disruption since the Middle East conflict erupted, hitting vessel traffic through the Strait of Hormuz. The narrow waterway linking the Persian Gulf to global markets has become a flashpoint after the U.S. and Israel launched strikes on Iran on February 28, with Tehran tightening its grip on the corridor and effectively choking a vital shipping route.
The fallout is rippling far beyond the region. India is among the most exposed economies, importing about 90% of its crude oil and more than half of its liquefied petroleum gas. Commerce Secretary Rajesh Agrawal said the crisis has weighed on India’s trade, with exports to the Middle East region falling by $3.5 billion and imports declining by $8.7 billion in March.
The government has moved to cushion the impact on exporters, though concerns persist that a prolonged conflict will weigh on the trade outlook this fiscal year. India’s exports of jewelry, electronics and fuel to the Middle East fell in March, the ministry said on April 15.
Sustained tensions are likely to keep oil prices elevated, straining the current account and adding pressure on the currency. The rupee has weakened 2.6% since the war began.
Agrawal also said that New Delhi continues talks with Washington to finalize a trade deal. A delegation from India is set to visit the U.S. on April 20–22 for further discussions, the ministry said.
