Indian-flagged tanker Jag Vasant carrying liquefied petroleum gas (LPG) is seen moored at an offloading terminal along the coast in Mumbai, India, after passing through the Strait of Hormuz amid the ongoing conflict in the Middle East.
Nurfoto | Nurfoto | getty images
The Iran war has adversely affected India’s merchandise exports. pulling them down That surged more than 7% in March, and hopes for a recovery faded in a year already hit by US tariffs. Experts have warned that the situation may get worse before it improves.
India’s merchandise exports fell to $38.9 billion last month from $42.1 billion a year earlier, according to data released by the Commerce Ministry on Wednesday.
The recession was severe in major markets. Shipment to UAE, India’s second largest export destination declined by approximately 62% year on yearWhile its biggest market, the US, declined by 21%.
“There has been broad-based weakness across key export categories – agricultural goods, textiles, chemicals, electronic goods and gems and jewelery all recorded negative growth,” global brokerage Nomura said in a report on Wednesday.
tariff compound pressure
For the fiscal year ending March 2026, goods exports rose less than 1% to $441.78 billion, underscoring the damage caused by the 50% US tariffs imposed from August last year to the beginning of this year. America Tariffs on Indian goods were reduced to 18% in February.
“The US tariffs were a major drag on Indian exports this year,” Ajay Sahay, director general and CEO of the Federation of Indian Export Organizations, told CNBC’s “Inside India” on Thursday. He said the Iran war has become a new source of uncertainty for exporters.
Sahay said several factors have slowed export growth and India is unlikely to achieve its $2 trillion export target by 2030, which will take it about two years.
India set out That ambitious export target in 2022Which includes goods as well as services. Goods exports reached a record $451 billion in the fiscal year ending March 2023, but have since failed to surpass that level.
there’s more pain ahead
Nomura warned that Indian exporters now face “a series of headwinds”, as the Iran war drives cost inflation, shipping and insurance costs rise sharply and global demand weakens.
Sahay expressed concern, noting that outside the Middle East, exporters were absorbing most of the increase in freight costs, with only a portion of it passed on to importers. Liquidity remains the biggest pressure point, he said, forcing the industry to seek government support.
“Even if an agreement is reached in the Middle East in April, it will take at least two months to fully recover from the impact of the conflict,” Sahay said.
Trade data for March showed that the Iran war had a more pronounced impact on exports than imports. India’s imports fell 6.5% to $59.59 billion in March, mainly due to lower oil imports amid supply disruptions due to the conflict, analysts said.
“At $12.2 billion, this is the lowest monthly oil import bill in 13 months,” Citi said in a report on Wednesday. He said the impact of higher crude oil prices would be visible in trade data with a lag of one month.
India’s benchmark indices, Nifty 50 and BSE Sensex, were down 0.3% on Thursday.
