India’s external position in March 2026 demonstrated resilience with the goods trade deficit decreasing to $21 billion, attributed to a significant drop in precious-metal imports and a surge in exports, as per a report by Emkay Global Financial Services. The services sector surplus remained strong, offsetting the rise in goods deficit. Total imports declined by about 6% to $59.6 billion, while total exports increased by 6% to $38.9 billion during the month.
The report highlighted a notable 6% month-on-month decrease in oil imports, despite higher prices, possibly due to a 35-40% volume reduction following the closure of the Strait of Hormuz. Additionally, the reduction in the goods trade deficit was primarily driven by a substantial 59% decrease in gold import value and a 63% drop in silver imports. On the other hand, oil exports surged by approximately 51% month-on-month to $5.2 billion, reaching the highest level since May 2025.
Furthermore, exports to Saudi Arabia and the UAE experienced declines of 44% and 60% respectively, likely influenced by the ongoing conflict, contributing to a roughly 22% month-on-month decrease in gems and jewellery exports. Looking ahead, the report predicted a baseline scenario for fiscal 2027, assuming Brent crude at $80 per barrel, estimating a current account deficit of around 1.7% of GDP and a balance of payments shortfall exceeding $35 billion.
Services exports remained robust in FY26, supported by GCCs, but potential challenges may arise in FY27 from a global growth shock if the Middle East crisis persists, according to projections by the firm.
