India’s Trade Deficit Widens to $28.38Bn in April as West Asia Conflict Hits Oil, Shipments

India's merchandise trade deficit zoomed to $28.38bn in April as the ongoing West Asia conflict hindered shipments and increased the import bill due to a spike in oil prices, the government data showed on Friday.

Merchandise exports during the period rose to $43.56bn from $38.92bn in March, while imports rose to $71.94bn from $59.59bn, data showed.

The overall trade deficit, including services, narrowed to $7.81 bn in April from $11.16 bn a year earlier. Total exports, covering both merchandise and services, rose to $80.80bn from $71.13 billion, whilst total imports climbed to $88.61bn from $82.29bn.

Services exports grew to $37.24bn in April from $32.85bn a year ago, while services imports eased slightly to $16.66bn from $16.91bn.

Commerce secretary Rajesh Agrawal said reported that electronics, petroleum, poultry were the key drivers of exports, with exports to West Asia recording a fall of 28% year-on-year in April. Imports have also seen a significant reduction from West Asia, slipping 30% in April compared to the year-ago period, Agrawal said.

India, the world's third-largest oil importer and consumer, sources more than 80% of its crude oil requirements and 60% of its cooking gas from overseas, with the Middle East accounting for a substantial share of that supply.

Global crude prices have surged to as high as $120 per barrel since the Iran war broke out at the end of February, a conflict that has kept the Strait of Hormuz largely closed to traffic.

However, the commerce ministry stated that the rise in oil prices will not affect India's export competitiveness because this is an MFN increase impacting globally.

In March, the merchandise trade deficit narrowed to $20.67bn, as exports fell to $38.92bn and imports declined to $59.59bn.

Reuters reported that India's gold imports in April likely remained muted, with shipments potentially falling to their lowest level in nearly 30 years after banks halted purchases — a development that may have helped keep the overall trade gap in check, though detailed data is yet to be released.