India's Trade Deficit Widens in March: What the Numbers Are Telling Us

India's trade deficit in merchandise jumped to $21.54 billion in March, well above economists' estimates of $16 billion. The increase, led by a steep increase in gold and oil imports, is a sharp reversal from the over three-year low of $14.05 billion posted just last month.

According to government data, March imports stood at $63.51 billion, up from $50.96 billion in February, while exports rose to $41.97 billion from $36.91 billion. Oil imports alone surged to $19 billion, their highest monthly level since May 2024. Gold imports also nearly doubled to $4.4 billion, reflecting seasonal demand and possibly investor hedging amid global uncertainties.

Zooming out to the full fiscal year, India’s combined goods and services exports rose over 5% to $820.93 billion. While goods exports remained flat at $437.42 billion, services exports powered ahead with a 12% rise, reaching $383.51 billion. Imports, however, grew faster up nearly 7% to $915.19 billion- driven by a 6% increase in goods imports and a 9% rise in services imports.

This broadening trade deficit reflects two fundamental realities: the strength of domestic demand and vulnerability to swings in commodity prices. Although strong services exports remain a buffer, pressure from energy and bullion imports continues to be a watchful point for India's external balances.

With world markets still shaky and supply chains still adjusting, this information comes as a reminder of the high-wire act involved in achieving growth while holding together macroeconomic stability.