India’s trade deficit widened to a three-year high of $119.3 billion in FY26, driven by a surge in gold and silver prices and a sharp drop in exports to West Asia בעקבות the Iran crisis, according to government data released on Wednesday.
While exports posted moderate growth of 4.22% to $860 billion during the year, imports rose at a faster pace of 6.5% to $979.4 billion, significantly widening the overall trade gap, data from the Commerce Ministry showed.
India’s trade surplus with the United States narrowed to $34.4 billion in FY26 from $43 billion a year earlier. Exports to the US remained largely flat, rising just 1% to $87 billion, while imports from the country jumped 16% to $53 billion.
Commerce Secretary Rajesh Agarwal said the West Asia crisis had a severe impact on India’s trade flows, affecting both exports and imports. Exports to the region plunged 57.95% to $3.5 billion in March, while imports fell 51.64% during the same period.
Despite continued pressure on merchandise trade amid geopolitical tensions, services trade provided a cushion. Services exports grew nearly 8% to $418.31 billion in FY26 from $387.55 billion a year earlier, while services imports rose to $204.42 billion from $198.72 billion, helping offset part of the merchandise trade deficit.
In March, exports declined over 7% year-on-year to $38.92 billion from $42.05 billion, while imports fell to $59.59 billion from $63.71 billion. The merchandise trade deficit for the month stood at $20.67 billion.
Amid the challenging global environment, India’s exports to China rose by more than $5 billion in FY26. Shipments also saw notable increases to markets such as Spain and Vietnam, the Commerce Ministry said.
Gold imports surged in value despite a decline in volume, reflecting elevated prices. The value of gold imports rose over 24% from $58.01 billion in FY25 to $71.98 billion in FY26, even as volumes fell from 757.09 tonnes to 721.03 tonnes. The average unit value increased sharply from $76,617 per kg to $99,825 per kg.
Silver imports, meanwhile, saw a sharp rise in both value and volume. Imports increased from $4.83 billion to $12.05 billion, while quantities rose from 5,164.37 tonnes to 7,334.96 tonne.