India’s trade deficit shrank to $20.67 billion in March 2026, down from $27.1 billion in February and $21.69 billion a year earlier. This figure was significantly below market expectations of $32.75 billion, marking the smallest trade gap since June 2025. The improvement came as exports rose to $38.92 billion, up from $36.61 billion in February, while imports fell to $59.59 billion, down from $63.71 billion. However, the outlook remains uncertain due to escalating geopolitical tensions in West Asia. The US military recently halted maritime trade linked to Iran, though President Donald Trump suggested that negotiations with Tehran could resume. Unlike export-driven economies such as Japan, South Korea, and Taiwan, India’s heavy reliance on Gulf shipping routes makes it particularly vulnerable to disruptions and rising costs from the ongoing conflict.

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