India’s merchandise trade deficit shrank significantly to $20.67 billion in March 2026, official data reveals. This figure surpasses economists’ projections of $32.75 billion and marks an improvement from February’s $27.1 billion gap.
March Expo and Impo Trends
Merchandise expos climbed to $38.92 billion in March, up from $36.61 billion the previous month. Impos dropped to $59.9 billion from $63.71 billion. The uptick in expos and decline in impos occurred against the backdrop of the ongoing Middle East crisis.
March 2026 saw the highest monthly merchandise expos of the fiscal year.
Fiscal Year 2025-26 Expo Records
Combined goods and services expos for FY 2025-26 reached a record $860.09 billion, reflecting a 4.22% year-on-year increase. Merchandise expos totaled $441.78 billion, while services expos hit $418.31 billion, according to Commerce Secretary Rajesh Agrawal.
Trade Dynamics with Key Paners
India’s trade surplus with the United States narrowed to $34.4 billion in FY 2026 from $43 billion the prior year. Expos to the US grew 1% to $87 billion, while impos surged 16% to $53 billion.
India and the US advance toward a bilateral trade deal, building on a February 26 joint statement. Officials finalize mutual concessions, with meetings set to begin April 20 to outline structure and timelines, Agrawal noted.
China emerged as India’s top trading paner in FY 2025-26, surpassing the US after four years of US dominance.
Geopolitical Risks Ahead
Despite gains, vulnerabilities persist due to reliance on Gulf shipping routes. Geopolitical tensions in the Middle East threaten supply disruptions and rising costs. The US military recently halted maritime trade connected to Iran, while President Donald Trump stated he is “permanently opening” the Strait of Hormuz, sending mixed signals on the conflict.
