India's merchandise trade deficit widened sharply to $28.38 billion in April, as imports rose 10 per cent year-on-year despite a steep decline in inbound shipments from the Middle East amid continuing geopolitical disruptions. Government data released on Friday revealed that India's imports increased to $71.94 billion in April from $65.38 billion in the same period last year, while exports stood at $43.56 billion.
Trade Deficit Exceeds Expectations
The trade deficit widened significantly from $20.67 billion in March and came in higher than market expectations. Elevated crude oil prices and global supply disruptions continued to increase import costs, contributing to the widening gap. Commerce Secretary Sunil Barthwal noted that imports from the Middle East declined 31.64 per cent to $10.47 billion in April from $15.32 billion a year ago, as reported by PTI.
Geopolitical Disruptions Impact Imports
The sharp fall in imports from the region comes amid disruptions linked to the ongoing Iran conflict and stress around the Strait of Hormuz, a critical global energy transit route. India, the world's third-largest crude oil importer and consumer, imports more than 80 per cent of its oil requirements, with the Middle East accounting for a substantial share of supplies.
Concerns Over External Sector
The widening trade gap has added to concerns around India's external sector, as elevated crude prices, higher freight costs, and sustained foreign exchange outflows continue to pressure the rupee and inflation outlook. In recent weeks, the government has announced multiple measures to conserve foreign exchange reserves, including tighter gold import rules, higher import duties on precious metals, and calls for fuel conservation.
Services Sector Performance
Government estimates also showed services exports at $37.24 billion in April, while services imports were estimated at $16.66 billion. The services sector continues to provide a cushion to the overall trade balance, though the merchandise trade deficit remains a key area of focus for policymakers.
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