India’s merchandise trade deficit widened sharply to $21.54 billion in March, reversing the relief seen in February when the gap had narrowed to a three-year low of $14.05 billion.
The sudden spike came as imports shot up to $64.51 billion in March from $50.96 billion in February, outpacing the rise in exports during the same period.
For the full financial year 2024-25, India’s merchandise exports remained largely flat at $437.42 billion compared to $437.07 billion in FY24. But the Commerce Ministry pointed to strong growth in select categories.
“We have achieved higher merchandise exports than last year, with highest non-petroleum merchandise exports,” it said in a statement, adding, “We have broken records of non-petroleum exports. The segment grew by 6%.”
Non-petroleum merchandise exports were recorded at $374 billion in FY25, the highest ever. The ministry said: “As per conservative estimates, our overall exports of $820 billion will be highest ever.”
In FY 2024-25, all import commodities saw an increase compared to the previous fiscal year, except coal and briquettes.
Key imports included petroleum products, which rose to $185.78 billion from $178.83 billion in FY 2023-24, and electronic goods, which surged to $98.73 billion from $87.86 billion.
Gold imports also climbed to $58.01 billion, up from $45.54 billion, while machinery imports increased to $53.55 billion, up from $48.87 billion.
March exports stood at $41.97 billion, higher than $36.91 billion in the previous month. However, economists polled by Reuters had expected the March deficit to be far lower at around $16 billion.
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The government credited this performance to resilience in the face of global challenges. “Last FY was difficult in terms of geopolitical tensions, recessions in several countries,” it said. “Despite WTO's pessimistic prediction, India has done much better than other countries.”
Among product categories, exports of electronics surged by 32.47%, while tea rose 11.84%, plastic by 10.23%, garments 12.03%, drugs and pharmaceuticals 8.39%, and engineering goods by 6%. Agricultural products such as coffee (40.37%), rice, and tobacco (36%) also witnessed healthy growth.
India’s share in US smartphone imports rose significantly to 13.73% in 2024 from 7.88% in 2023, reflecting a diversification away from China amid rising tariffs.
However, the ministry flagged the risk of a potential surge in imports. “Recent assessment highlighted risk of merchandise dumping into India due to reciprocal tariffs,” it noted.
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Rising costs in the US could prompt exporters from China, Vietnam and Indonesia—countries all facing trade deficits with the US—to divert their goods to India. “Chinese retaliatory tariffs on US goods could further increase inflow of US agricultural products into India,” the ministry warned.