Rising imports widen trade deficit

India’s merchandise exports grew 0.7% on-year to $41.97 billion in March from $41.69 billion in the year-ago period amid  the ongoing trade tensions. However, the impact of reciprocal tariff announcements will be clearer in next month’s data.

Oil exports slumped for the 10th consecutive month in March, contracting 9.5% on-year, compared with a 29.3% contraction in February, as prices fell. Brent crude slipped to $72.6 per barrel from $85.4 per barrel a year ago and $75.2 per barrel in February.

That said, core exports grew 1.5% on-year, following a 4.7% contraction the previous month. Exports of gems and jewellery, too, grew 10.6% on-year, compared with a 20.7% contraction in February.

In the core category, drugs and pharmaceuticals registered a strong growth (31.4% on-year, likely reflecting some surge in US demand in anticipation of the tariff hike). Exports of agriculture and allied products such as fruits and vegetables grew 8.6% in March vs 0.9% in February. Meat, dairy and poultry products were up 16.6% vs 6.7% and marine products logged 28.6% vs 3.4%.

While the growth in overall exports of goods remained almost static, merchandise imports galloped 11.4% on-year to $63.51 billion in March from $57.03 billion a year ago. Growth in gems and jewellery (39.4% vs -59.8%) and oil (16.3% vs -29.6%) imports remained the primary reason for the increase in import growth. Core import growth was 5.3%, up from 3.1% growth the previous month.

As a result, merchandise trade deficit widened to $21.54 billion in March compared with $14.05 billion in February and $15.3 billion a year ago.