India's merchandise exports experienced a dramatic 7.44% decline to $38.92 billion in March 2026, marking the sharpest decline in five months, according to latest government data. The sharp drop was attributed to West Asia conflict and disruptions in key trade routes that significantly impacted logistics and shipments. As reported by Commerce Secretary Rajesh Agrawal, the ongoing conflict involving the US, Israel and Iran, which began on February 28, significantly impacted regional trade flows. Exports to the Middle East plunged nearly 58% to about $2.5 billion from a typical monthly level of around $6 billion, with the country's trade deficit standing at $20.67 billion during the month, reflecting the impact of tensions affecting routes such as the Strait of Hormuz. The decline follows disruptions in maritime traffic through the Strait of Hormuz, after a joint US-Israel military strikes in Iran triggered a war in the region. Commerce Secretary Rajesh Agrawal noted that April could also be a tough month for exports due to the conflict, which is hampering ship movements in international waters.
In stark contrast to export performance, imports fell 6.51% to $59.59 billion during March 2026, down from $63.75 billion in the year-ago period, according to government data. For the full financial year 2025-26, imports increased 7.45% to $775 billion from $721.2 billion in the previous year. The decline was led by a steep drop in crude oil and gold purchases, with crude oil imports dropping 35.91% to $12.18 billion and gold imports falling 31.63% to $3.06 billion. For the full financial year, imports from Gulf nations also contracted sharply, falling 51.64% while imports from Russia, Iraq and Indonesia declined. However, imports from the UAE, Saudi Arabia, Switzerland and Japan increased, suggesting strategic stockpiling by industry players, with Colin Shah, Managing Director of Kama Jewellery, noting this rise in imports suggests deliberate stockpiling of raw materials in anticipation of a future revival in demand.
The Middle East conflict had a particularly severe impact on regional trade, with India's exports to the Middle East declining 57.95% in March while imports from the region fell 51.64% during the same period, as reported by Commerce Secretary Rajesh Agrawal. The disruptions in key trade routes, including the Strait of Hormuz, significantly affected logistics and shipments. Shipments to the region fell to about $2.5 billion from a typical monthly level of around $6 billion. As per GJEPC chairman Kirit Bhansali, the Middle East conflict affected gems and jewellery exports as logistics were disrupted, with diamond export parcels unable to get through due to high-risk situations that skyrocketed insurance premiums. This represents a substantial contraction from the $28,669.53 million total exports recorded in March 2025. The main five sectors that recorded a dip in shipments include gems and jewellery, engineering goods, electronic items, petroleum products and rice.
Cut and polished diamond exports were particularly hard hit, declining 27.48% to $838.75 million due to weak global demand and sharp price drops, according to GJEPC provisional data. The sudden price decline has led consumers to reduce fresh purchases in anticipation of further declines. In contrast, imports of cut and polished diamonds surged 312.15% in March, and rose 28.32% over the full year, driven by inventory rebuilding, improved supply availability, and expectations of demand recovery. For the full fiscal year 2026, cut and polished diamond exports dipped 8.52% to $12,159.83 million compared to $13,292.43 million in 2024-25. Rough diamond imports declined 2.67% to $10,478.83 million during the year, reflecting subdued cutting demand and inventory optimisation by manufacturers.
Gold jewellery exports experienced a 48.11% decline to $655.92 million in March 2026, affected by high gold prices, softer seasonal demand, and reduced overseas orders. For the full year, gold jewellery exports remained largely stable, slipping marginally by 0.03% to $11,364.32 million, with rupee gains offsetting dollar weakness. Within the segment, plain gold jewellery exports fell 70.65% in March and declined 7.42% over the year, while studded gold jewellery exports dropped 19.62% in March but rose 6.27% annually, supported by stronger festive and wedding demand in select international markets. Polished lab-grown diamond exports were also down 27.56% in March 2026, due to weaker global retail demand, increased price competition and inventory correction in key export markets. Despite these challenges, silver jewellery exports showed resilience with a 52.21% increase to $1,467.47 million (₹13,013.54 crore) in FY26 compared to $964.10 million in the previous year, due to strong global demand for affordable jewellery and higher consumer preference for silver as a cost-effective alternative to gold.
For the full fiscal year 2025-26, merchandise exports increased 0.93% to a record $441.78 billion from $437.7 billion in the previous year, while imports rose to $775 billion from $721.2 billion, according to Commerce Secretary Rajesh Agrawal. Despite the monthly dip, India's overall trade performance in the 2025-26 fiscal year remained resilient, with the trade deficit ballooning to $333.2 billion largely due to higher gold and silver imports. Services exports were estimated at $418.31 billion for the fiscal year. Commerce Secretary Rajesh Agrawal expressed hope that whatever India was not able to send or sell to the Middle East because of these logistical challenges, exporters will be able to diversify to other markets. China overtook the United States to become India's largest trading partner in 2025-26, with bilateral trade reaching $151.1 billion. India's trade deficit with China widened to a record $112.16 billion, as imports rose 16% to $131.63 billion, outpacing a 36.66% rise in exports to $19.47 billion. A number of major markets, including the Netherlands, the United Kingdom, Singapore, Bangladesh, Saudi Arabia and Australia, recorded negative export growth for India in 2025-26, while shipments to the United Arab Emirates, Germany, Hong Kong, Italy and Brazil posted gains.
