India's merchandise trade deficit widened sharply to $28.38 billion in April, significantly exceeding market expectations of $26 billion as reported by Reuters. This represents a notable increase from $20.6 billion in March, highlighting renewed pressure on the external account. The deficit expansion reflects the impact of Middle East disruptions and soaring energy costs on India's import bill, despite strong export performance. According to data from the Ministry of Commerce and Industry published on Friday, the trade gap widened by $8 billion compared to the previous month, demonstrating the severity of the energy crisis impact.
Gold imports experienced a dramatic surge of 82% year-on-year to $5.63 billion in April, following the government's decision to raise import duties on precious metals to cool pressure on the rupee amid the ongoing West Asia war. Silver imports more than doubled to $411 million compared to the same month last year, while the vegetable oil import bill surged 40% to $1.72 billion. As per The Indian Express, this represents a significant increase in non-essential imports despite government efforts to curb such purchases. Commerce Secretary Rajesh Agrawal confirmed that the government has not planned any further policy measures to discourage imports at this time, though he emphasized the Prime Minister's call for citizens to reduce non-essential consumption.
The trade deficit expansion was significantly impacted by global crude prices rising as high as $120 per barrel since late February, adding to inflation and growth concerns. For India, which is the world's third-largest oil importer and consumer, the country depends on overseas suppliers for more than 80% of its crude oil needs and around 60% of its cooking gas requirements, with the Middle East accounting for a significant share of supplies. Since the war began and cut off over 40% of India's crude oil flows that passed through the Strait of Hormuz, the oil import bill has soared as India and other major crude oil importers source more expensive supply from producers not dependent on the Strait. The oil supply crisis is already seeping through India's economy, with investors fleeing capital markets and the local currency plunging to an all-time low against the U.S. dollar.
India's merchandise exports demonstrated strong resilience in April, jumping 13.8% to $43.56 billion despite facing significant supply chain disruptions. According to reports from Business Standard, this robust performance came amid ongoing conflict in West Asia following the joint attack by the US and Israel on Iran in February. The export growth reflects India's ability to maintain trade momentum despite geopolitical challenges affecting global supply chains, with goods exports jumping 13.8% year-on-year as noted in the latest data. However, the value of imports soared as international oil and gas prices jumped amid the Middle East conflict. Outbound shipments of petroleum products soared 35% to $9.59 billion in April, highlighting the energy sector's strong performance despite broader economic challenges.
India's merchandise exports demonstrated significant geographic diversification in FY26, with North America, North-East Asia, and Latin America together accounting for over 35% of India's total exports. According to commerce ministry data, North America exports reached $97.7 billion (22.1% share), growing modestly at 1.3% year-on-year, while North-East Asia exports surged 21.6% to $41.6 billion, raising the region's share to 9.4% of total exports. Latin America maintained healthy expansion with exports rising 7.8% to $16.4 billion, contributing 3.7% to India's total exports. East Africa exports increased 13.7% to $12.6 billion (2.9% share) and North Africa rose 14.8% to $8 billion (1.8% share). As per an official, "India's exports in 2025-26 reflected increasing geographic diversification, with strong growth across Asia, Africa, and Latin America even amid global trade disruptions."
