India’s merchandise exports grew by over 4 per cent in the 2025-26 fiscal year, though the overall trade deficit widened by more than 26 per cent for the full year, according to data released by the Commerce Ministry on Wednesday. Despite the annual expansion of the gap, the trade deficit narrowed in March as both exports and imports saw a synchronised dip during the final month of the fiscal year.
Commerce Secretary Rajesh Agrawal said India’s exports are doing well despite challenges. The country’s merchandise exports during April-March 2025-26 went up 1 per cent to $441.78 billion from $437.7 billion. Imports also increased to $774.98 billion during the period from $721.2 billion in 2024-25. Services exports are estimated at $418.31 billion in 2025-26, showing a growth of around 8 per cent.
For March, India’s total exports (merchandise and services combined) are estimated at $74.11 billion, registering a negative growth of (-)4.58 per cent as against March 2025. Total imports (merchandise and services combined) for March 2026 are estimated at $76.55 billion, registering a negative growth of (-) 5.76 per cent as against March 2025. Accordingly, trade deficit narrowed to $2.44 billion as against $3.55 billion in March.
West Asia conflict
Due to the war involving the US, Israel and Iran, which began on February 28, India’s exports to West Asia fell 57.95 per cent in March, Agrawal said, adding that total imports from that region also declined by 51.64 per cent last month. Imports of crude oil and related products fell nearly 36 per cent year-on-year to $12.18 billion in March, while gold imports declined 31.6 per cent to $3.06 billion.
Commenting on the yearly data, SC Ralhan, President of FIEO, said: “Crossing $860 billion in exports is a notable achievement, particularly amid global uncertainties, supply chain disruptions, and fluctuating demand. It highlights the adaptability and strength of Indian exporters.”
Growth drivers
He said that export growth was driven by a diversified basket, including engineering goods, petroleum products, electronics, pharmaceuticals, chemicals, textiles, gems & jewellery, rice and marine products, strengthening India’s position in global value chains. The US, UAE, China, the Netherlands, and the UK remained key export destinations. FIEO emphasized the need to further diversify markets and effectively leverage Free Trade Agreements to expand India’s global footprint.
According to Aditi Nayar, Chief Economist at ICRA Ltd, amidst a sharp YoY dip in oil imports following the West Asia crisis, India’s merchandise trade deficit eased to $20.7 billion in March 2026 from $21.7 billion in the year ago month, after having displayed a steep increase in January-February 2026.
“This would provide some respite to the current account balance in Q4 FY2026, which would nevertheless likely witness a deficit to the tune of 0.6 per cent of GDP in the quarter, in contrast with the typical seasonal surplus that is seen during the last quarter of the fiscal,” she said while adding that India’s CAD is expected to widen to 0.9 per cent of GDP in FY2026 from 0.6 per cent in FY2025, reflecting a combination of tariff-related issues and the gold price spike.
Published on April 15, 2026