India’s goods trade deficit widens to $21.54 bn in March, trade surplus against US rises to $41.18 bn

New Delhi: India's trade surplus with the US jumped 16.6% in the just-ended financial year, ballooning to $41.18 billion in FY25 from $35.32 billion in the previous year, even as President Donald Trump prepared to hike US tariffs in protest.

According to commerce ministry data released on Tuesday, Indian goods exports to the US in the last financial year increased by 11.6%, from $77.52 billion in FY24 to $86.51 billion in FY25. 

To be sure, imports from the US also rose but by a smaller margin of 7.42%, going up from $42.20 billion to $45.33 billion during the fiscal year that ended on 31 March. 

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Major goods exported to the US included electronic goods, textiles, drugs and pharmaceuticals, engineering goods, gems and jewellery, petroleum products and agricultural products.

Trump raised the tariff on Indian goods exports to 27% on 2 April, complaining of rising US deficit, before announcing a 90-pause on tariff hikes on all countries on 9 April.    

Widening deficit

Globally, India’s trade deficit widened sharply to $21.54 billion in March, rising from a three-year low of $14.05 billion in February. Merchandise exports for FY25 stood at $437.42 billion, marginally higher than the $437.07 billion recorded in FY24, while goods imports came in at $720.24 billion in FY25, which was $678.21 billion in FY24, as per commerce ministry data released on Tuesday.

March's goods exports stood at $41.97 billion, while imports were $63.51 billion, compared with $36.91 billion of exports and $50.96 billion of imports in February.

Oil imports surged to $19 billion in March, up from $11.8 billion in February —the highest monthly oil imports since May 2024, when they reached $19.95 billion. Gold imports also nearly doubled to $4.4 billion in March from $2.3 billion in the previous month.

India's exports of both goods and services in the current fiscal year increased by over 5.39%, reaching $820.93 billion, compared with the previous year. Meanwhile, imports grew by 6.96%, totaling $915.19 billion.

Globally, the goods export figure of $437.42 billion for FY25 fell short of economists' expectations. The Export-Import Bank of India had estimated that total merchandise exports for the full fiscal year would reach $446.5 billion. 

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However, the services exports in FY25 rose 12% to $383.51 billion, while services imports were up 9% to $194.95 billion in FY25.

Meanwhile, imports of goods from China rose by 11.5%, from $101.74 billion in FY24 to $113.46 billion in FY25, while exports to China decreased by 14.5%, from $16.67 billion in FY24 to $14.25 billion in FY25, the data showed.

The US is the top export destinations for India, followed by the UAE, Netherlands and the UK. On the other hand, China remains the leading source of imports for India, followed by Russia, the UAE, the US and Saudi Arabia.

Services exports fall

Services exports stood at $31.64 billion in March, slightly up from $31.03 billion in February, while services imports stood at $13.73 billion, down significantly from $16.55 billion in February.

India’s foreign trade has been hit by weak demand in major markets, geopolitical tensions, volatile commodity prices, and reciprocal tariff actions threatened by the US one of its largest trading partners.

Last October, the World Trade Organization (WTO) raised its 2024 global trade growth forecast to 2.7% from 2.6% but lowered its 2025 projection from 3.3% to 3.0%. It expects trade growth in both years to align with real global GDP expansion of 2.7% at market exchange rates.

Engineering goods, petroleum products, electronic goods, drugs and pharmaceuticals were key drivers of merchandise exports in the April–March period, according to the official data.

Major imports included petroleum products, electronic goods, gold and machinery.

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On surpassing the $800 billion trade export mark, Commerce Secretary Sunil Barthwal expressed confidence that this momentum will continue into FY26.

"The export sector has performed exceptionally well, surpassing the $800 billion milestone. We are aiming for a larger export target for this fiscal," Barthwal said.

“This positive growth continues despite facing difficulties in the gems and jewellery sector. Other sectors have also demonstrated strong growth, which gives us great satisfaction," he added.

Colin Shah, managing director of Kama Jewelry, said, “The marginal rise in exports in March, though minimal, brings some relief to the gems and jewellery industry after a long wait for any signs of revival. However, the overall decline in exports for FY25 remains a major concern.”

“The ongoing global uncertainty, compounded by tariff threats from the US and prolonged geopolitical tensions, has put additional pressure on the industry. We are hoping for swift relief measures to support a quicker recovery and to help the sector bounce back stronger," said Shah.