India’s merchandise trade deficit widened to $28.38 billion in April, coming in above market expectations, as the ongoing conflict in the Middle East disrupted shipments, pushed up energy costs and weighed on India’s import bill.
Economists polled by Reuters had projected a trade deficit of $26.5 billion for the month, compared with a deficit of $20.67 billion in March.
Also Read: India’s trade deficit narrows to $20.67 billion in March on West Asia risks
India’s merchandise exports rose to $43.56 billion in April from $38.92 billion in March, while imports climbed sharply to $71.94 billion from $59.59 billion, according to the data.
The government estimated services exports at $37.24 billion in April, with services imports at $16.66 billion, helping lift India’s overall exports of goods and services to an estimated $80.80 billion during the month.
India, the world’s third-largest oil importer and consumer, depends on overseas suppliers for more than 80% of its crude oil requirements and around 60% of its cooking gas needs, with the Middle East accounting for a significant share of supplies.
The prolonged Iran conflict has disrupted shipping through the Strait of Hormuz and driven global crude prices as high as $120 per barrel since late February, raising concerns over inflation, economic growth and India’s external balance.
The rupee has also come under pressure amid the energy shock, emerging as Asia’s worst-performing currency this year and prompting policymakers to step up interventions to support foreign exchange reserves and manage import costs.
Prime Minister Narendra Modi has urged fuel conservation measures, greater use of work-from-home practices and curbs on non-essential imports and travel to reduce pressure on the economy.
Also Read: India wholesale inflation jumps to 8.3%, highest in 3-1/2 years on oil shock
Commerce Secretary Rajesh Agrawal said India’s imports from West Asia fell 31.64% year-on-year to $10.47 billion in April from $15.32 billion a year earlier, reflecting softer inbound shipments amid geopolitical tensions and disruptions to key shipping routes.
India’s gold imports also likely remained subdued during the month, with shipments seen falling to a near 30-year low after banks halted purchases, which may have helped contain the overall trade deficit, as per a Reuters report.
