New Delhi, April 16 The trade deficit widening has been pushed out rather than avoided, a report showed on Thursday, adding that if the energy shock persists and Brent oil prices stays elevated, the deficit is likely to widen in the coming months.
India's goods trade deficit came in at $20.7 billion in March, much lower than last month's $27 billion deficit. The March deficit is usually slightly narrower, but markets expected it to widen this time as Brent is up 60 per cent YoY due to the Middle East conflict, said the HSBC Global Investment Research report.
Oil import bill came in lower than February, suggesting that March reflects supply/availability constraints more than a price shock.
“India buys about half of its energy needs (45 per cent of crude oil imports, 60 per cent of LNG imports, and 80 per cent of LPG imports) from the Middle East,” the report mentioned.
Oil exports rose to sharply (up 50 per cent on monthly basis). This rise in oil exports also explains the sharp upward revision in windfall taxes imposed by the government to ensure adequate availability of these fuels for domestic consumption.
Duties on export of diesel and ATF were revised up to Rs 55.5 per litre and Rs 42 per litre on April 12.
Gold imports fell sharply ($3.1 billion in March against an average import bill of $10 billion in Jan-Feb).
On a full year basis, India's trade deficit was at $333 billion in FY26 (compared to $283 billion in FY25) while the services trade surplus was at $214 billion (compared to $189 billion in FY25).
FY26 started with tariff related headwinds and ended with an oil shock, alongside a sharp rise in gold imports. India's goods trade surplus with the US narrowed to $34 billion (vs $41 billion in FY25).
While India's exports to China were clocking a healthy uptick, imports were growing even faster. As a result, India's trade deficit with China widened further ($112 billion vs $99 billion in FY25), said the report.
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