Iran war drags India’s goods exports 7% lower in March — more pain ahead
Indian flagged tanker Jag Vasant, carrying liquefied petroleum gas (LPG) after passing through the Strait of Hormuz amid ongoing conflicts in the Middle East, is seen approaching a coastal unloading terminal in Mumbai, India, on April 1, 2026.
Nurfoto | Nurfoto | Getty Images
The Iran war had a negative impact on India’s exports of goods. drag them down It rose more than 7% in March, and hopes for a recovery in a year have already been clouded by US tariffs. Experts warn that conditions may get worse before they get better.
India’s goods exports fell to $38.9 billion last month from $42.1 billion a year ago, data released by the commerce ministry showed on Wednesday.
The slowdown was sharp in key markets. Shipments to the UAE, India’s second largest export destination, down about 62% annuallyThere was a 21% decrease in the USA, its largest market.
“There is broad-based weakness with key export categories such as agricultural products, textiles, chemicals, electronics, precious stones and jewellery, registering negative growth,” global brokerage firm Nomura said in a report on Wednesday.
Tariff compound pressure
In the fiscal year ending March 2026, goods exports rose less than 1% to $441.78 billion; This underscores the damage caused by 50% US tariffs that were in effect from August last year until the beginning of this year. USA In February, we reduced customs duties on Indian goods to 18%.
“U.S. tariffs have created a bigger drag on Indian exports this year,” Ajay Sahai, managing director and CEO of the Federation of Indian Export Organizations, told CNBC’s “Inside India” on Thursday, adding that the Iran war has become a new source of uncertainty for exporters.
Sahai said many factors have slowed export growth and India is unlikely to achieve its $2 trillion export target by 2030, delaying this target by nearly two years.
India set out Ambitious export target in 2022including services as well as goods. Merchandise exports reached a record high of $451 billion in the fiscal year ending March 2023, but have failed to surpass that level since then.
More pain ahead
Nomura warned that Indian exporters now face a “trio of headwinds” as the Iran war fuels cost inflation, sharply increases shipping and insurance costs and weakens global demand.
Sahai also reiterated his concerns and stated that outside the Middle East, exporters bear most of the increase in freight costs, while only a portion of this is transferred to importers. He said liquidity remained the biggest pressure point, leading to calls from the industry for government support.
“Even if a solution is reached in the Middle East in April, it is likely to take at least two months to fully recover from the impact of the conflict,” Sahai added.
Trade data for March shows that the Iran war is having a more significant impact on exports than on imports. Analysts said India’s imports fell 6.5% to $59.59 billion in March, largely due to falling oil imports due to conflict-related supply disruptions.
“At $12.2 billion, this is the lowest monthly oil import bill in 13 months,” Citi said in its report on Wednesday, adding that the impact of higher crude oil prices would appear in trade data with a one-month delay.
India’s benchmark indices Nifty 50 and BSE Sensex fell 0.3 per cent on Thursday.
