India’s services sector showed resilience with a 13.4% year-on-year growth in exports, reaching $37.24 billion, while imports slightly decreased to $16.66 billion, as per a report by B2K Analytics. This growth helped counterbalance a widening merchandise trade gap caused by increased energy costs. The overall trade deficit, encompassing both merchandise and services, shrank to $7.8 billion for the month.
Merchandise exports in April surged by 13.8% to $43.56 billion, but imports also rose by 10% to $71.94 billion, resulting in a merchandise trade deficit of $28.38 billion. The spike in merchandise import value was primarily due to elevated crude oil prices and escalating energy-related expenses amidst geopolitical tensions in West Asia, the report highlighted.
The closure of the Strait of Hormuz and stalled US-Iran peace talks disrupted global energy supply chains, leading to higher oil prices and increased inflationary pressures globally. Notably, Russia emerged as a significant energy supplier for India, with the country boosting crude purchases amid supply disruptions in the Gulf region.
India’s major export destinations included the United States, with notable growth seen in exports to markets like Singapore, the UAE, Bangladesh, and the Netherlands, showcasing India’s efforts to diversify its trade partnerships. The country’s exports are predominantly focused on manufacturing and commodity-linked sectors, while imports are largely driven by energy, electronics, and precious metals.
The report cautioned that rising crude prices, rupee depreciation, and geopolitical uncertainties pose significant risks to India’s external sector outlook and overall economic growth in FY27. However, the weakening rupee could potentially enhance India’s export competitiveness by making its goods more affordable, the report suggested. Despite ongoing geopolitical challenges, Union Minister of Commerce and Industry, Piyush Goyal, expressed the government’s ambition to achieve a $1 trillion export target for FY2027 through new trade agreements.
