India’s merchandise trade deficit narrowed to a nine-month low in March as a sharp rise in exports to the United States helped offset disruptions caused by the ongoing Iran conflict, which has affected global shipping routes and increased energy and logistics costs. According to data released by the commerce ministry, the trade gap fell to $20.67 billion, compared to higher levels in the previous month, signalling improved external sector performance despite global uncertainty.
The narrowing of the deficit came as exports rose to $38.92 billion in March, up from $36.61 billion in the previous month. At the same time, imports declined significantly to $59.59 billion from $63.71 billion, contributing further to the improved trade balance. The data highlights a temporary easing in external pressure on India’s economy, even as global conditions remain volatile due to geopolitical tensions.
A key driver of the improvement was a strong increase in shipments to the United States, where exports jumped 17.4% month-on-month to $8.02 billion. This rise was supported by a reduction in tariffs to 10% following a US Supreme Court ruling, which boosted demand for Indian goods such as textiles and engineering products. The US remains India’s largest export destination, making this recovery particularly significant for trade performance.
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The improvement in exports comes at a time when the Iran war has disrupted key maritime trade routes, increasing freight costs and causing delays in global supply chains. Despite these challenges, Indian exporters benefited from a partial revival in US demand, which helped cushion the impact of external shocks and supported overall export growth during the month.
Economists note that India’s trade performance reflects two opposing forces: external disruptions driven by geopolitical tensions and a rebound in demand from major markets like the United States. While supply-side pressures continue to weigh on imports and logistics, stronger export momentum has provided a stabilising effect on the overall trade balance, at least in the short term.
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