India's trade deficit narrows to $20.67 billion in March

TL;DR

India's merchandise trade deficit narrowed to $20.67 billion in March 2026 from $27.1 billion in February.
Exports rose to $38.92 billion on a 17.4% surge to the US, while imports fell to $59.59 billion with lower oil and gold.
US tariff cuts offset a $3.5 billion drop in Middle East exports due to Iran war shipping disruptions.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)[[2]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15)

The story at a glance

India's trade ministry released March 2026 data showing the merchandise trade deficit unexpectedly shrank to a nine-month low of $20.67 billion, far below forecasts of $32.75 billion. A surge in exports to the US after tariff cuts to 10% countered losses from the Iran war's impact on Middle East trade. The report comes amid ongoing US-Iran talks and India's push for a US trade pact by June.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)

Key points

Merchandise exports climbed to $38.92 billion from $36.61 billion in February, driven by US shipments hitting $8.02 billion (up 17.4%), aided by a US Supreme Court ruling that cut tariffs from up to 50%.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)
Imports dropped to $59.59 billion from $63.71 billion; crude oil imports fell 36% year-on-year to $12.18 billion, gold down 31.6% to $3.06 billion.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)
Middle East exports fell by $3.5 billion due to Iran conflict blocking Strait of Hormuz routes for over a month, raising freight and insurance costs.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)
Services trade showed exports at $35.20 billion and imports at $16.96 billion, for a surplus of $18.24 billion (Reuters calculation).[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)
Fiscal year 2025-26 goods and services trade deficit widened to $119.3 billion from $94.66 billion, with exports up 4.22% to $860.09 billion.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)

Details and context

The narrower deficit beat economist expectations as US demand partially revived after tariff relief from a Supreme Court ruling, boosting textiles and engineering goods. India imports over 80% of its crude oil, mostly via Gulf routes hit by the Iran war, unlike some Asian peers that use other paths. Exporters now face higher logistics costs and delays, though US talks aim for an interim pact by June targeting 18% tariffs.

India's team heads to the US from April 20 to discuss legal frameworks and Section 301 tariffs. Failed US-Iran negotiations over the weekend may resume, potentially easing shipping woes. For context, February's deficit was $27.1 billion amid rising Middle East tensions.[[3]](https://www.reuters.com/world/india/indias-trade-deficit-narrows-271-billion-february-ahead-mideast-crisis-2026-03-16)

Key quotes

"Exports to the Middle East in March dropped by $3.5 billion... this has impacted goods exports in the month." - Rajesh Agrawal, India's Trade Secretary.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)

Why it matters

India's trade balance faces pressure from energy import reliance and geopolitical risks in the Middle East, offset by US market access. Businesses see relief in lower tariffs but higher shipping costs could squeeze margins for exporters and raise consumer prices for oil-dependent goods. Watch US-Iran talks and the April 20 India-US visit, which may shape tariffs and pact progress, though outcomes remain uncertain.[[1]](https://www.reuters.com/world/india/indias-trade-deficit-2098-billion-march-2026-04-15/)