A recent report revealed that India’s trade deficit is expected to widen in the upcoming months due to ongoing energy shocks and elevated Brent oil prices. In March, the country recorded a goods trade deficit of $20.7 billion, lower than the previous month’s $27 billion deficit. The decrease in the oil import bill for March indicates supply constraints rather than a price shock.
India heavily relies on the Middle East for energy sources, with around 45% of crude oil imports, 60% of LNG imports, and 80% of LPG imports coming from the region. Notably, oil exports saw a significant increase on a monthly basis, leading to a revision in windfall taxes to ensure ample fuel availability domestically. The government raised duties on diesel and ATF exports to Rs 55.5 per litre and Rs 42 per litre on April 12.
Gold imports experienced a sharp decline in March, dropping to $3.1 billion compared to an average of $10 billion in January and February. Looking at the full fiscal year, India’s trade deficit for FY26 stood at $333 billion, up from $283 billion in FY25, while the services trade surplus reached $214 billion, an increase from $189 billion in FY25. Despite a narrowing goods trade surplus with the US, India’s trade deficit with China expanded to $112 billion from $99 billion in FY25.
