India’s trade deficit expanded sharply in March, reflecting the strain of rising global trade uncertainties and the impact of US-led tariff measures. According to official data, the trade gap widened to $21.54 billion, well above the $15.5 billion estimate projected by economists in a media survey.
This comes after February's trade deficit had narrowed to $14.05 billion, marking its lowest point in over three years.
The March data showed only a marginal increase in exports, which rose by 0.7% to $41.97 billion compared to the same period last year. In contrast, imports surged by 11.4% to $63.51 billion, contributing to the overall rise in the trade gap.
The mismatch between exports and imports highlights the challenges India faces in maintaining a balanced trade equation in a volatile global environment.
Commerce Secretary Sunil Barthwal acknowledged the difficult trade environment during a press briefing in New Delhi. He pointed out that the last financial year was shaped by several international developments, including geopolitical tensions and protectionist measures.
Despite these hurdles, India’s total exports in the previous fiscal year surpassed $820 billion, signaling resilience across key sectors.
India is currently navigating a complex phase in global trade, especially as former US President Donald Trump’s tariff policies continue to influence international markets.
Though Trump's tenure has ended, the structural changes introduced during his administration — including tariffs on steel, aluminum, and Chinese goods — continue to reshape global supply chains. These policies have forced many economies, including India, to recalibrate their strategies.
Indian exporters have been pushing for a swift conclusion to a bilateral trade deal with the United States. Such an agreement is seen as critical to insulating Indian industries from the ripple effects of the broader tariff war.
Talks between the two countries gained momentum earlier this year, and both sides had agreed in February to conclude the first phase of the trade pact by fall.
In the face of increasing global competition and trade volatility, India is also exploring alternative markets and leveraging sectors where it holds a competitive edge.
The government is prioritising sectors like pharmaceuticals, electronics, textiles, and chemicals, which have shown potential for higher global demand.
The sharp rise in imports may also reflect stronger domestic demand, particularly for items like crude oil, machinery, and gold. However, the overall imbalance remains a concern for policymakers trying to manage both inflation and currency fluctuations.
As global trade flows remain sensitive to geopolitical shifts, India’s next steps in securing bilateral trade ties, especially with key partners like the US, will be closely watched. The ability to navigate these global currents will play a crucial role in shaping India’s economic trajectory in the coming months.
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