India’s merchandise exports fell 7.44 per cent year-on-year to USD 38.92 billion in March 2026 — the steepest monthly decline in five months — as the full weight of the Iran war’s disruption to Gulf shipping routes registered in the official trade data for the first time, with shipments to the West Asia region plunging 57.95 per cent and erasing approximately USD 3.5 billion from India’s monthly export total, according to figures released by the Commerce Ministry.
Exports to the UAE — India’s second-largest export destination — plunged nearly 62 per cent in March alone, while exports to the US, India’s largest market, dropped 21 per cent year-on-year before subsequently recovering in April following a US Supreme Court ruling that reduced tariffs on Indian goods from 50 per cent to 10 per cent. Commerce Secretary Rajesh Agrawal, who briefed media on the data, described the outlook for April as also challenging, saying the logistical disruptions from the conflict would continue to weigh on export flows.
Full-Year FY26 Picture: Less Than 1% Growth, $441.78 Billion
For the full financial year ending March 2026, India’s merchandise exports rose less than 1 per cent to USD 441.78 billion — a marginal improvement that masks the substantial structural damage inflicted first by US tariffs that were in place from August 2025, then by the Iran war disruption in the final month. India’s goods and services exports combined reached USD 860 billion for the full year — a 4.22 per cent increase — as services exports of USD 418.31 billion partially compensated for goods underperformance. India set an ambitious target in 2022 of reaching USD 2 trillion in combined goods and services exports by 2030; industry leaders now estimate the timeline has been pushed back by approximately two years.
Imports Fall Too, Narrowing Trade Deficit
Imports fell 6.51 per cent in March to USD 59.59 billion — a figure analysts at Citi described as the lowest monthly oil import bill in 13 months at USD 12.2 billion, as the Hormuz crisis simultaneously suppressed oil volumes reaching India even as crude prices surged. The trade deficit narrowed to USD 20.67 billion in March from USD 27.1 billion in February — well below the USD 28.5 billion deficit economists surveyed by Bloomberg had forecast. Nomura characterised Indian exporters as facing a ‘troika of headwinds’: the Iran war driving cost inflation, sharply higher shipping and insurance costs, and weakening global demand — a combination that Commerce Secretary Agrawal acknowledged would take at least two months to recover from, even assuming a Middle East settlement in April.
