India’s total merchandise exports grew by 13.8 per cent year-on-year in April 2026, mainly supported by petroleum exports. (AI image)
India’s import burden started rising in April 2026, with the country’s goods trade deficit widening to $28.4 billion, compared to about $27 billion in April 2025 and $20.7 billion in March 2026. HDFC Bank said in an analysis that the increase in the deficit was due to import growth more than export growth.After seeing a decline in imports during March, mainly due to lower purchases of crude oil and gold, India’s import bill rose 10 percent year-on-year in April. The rise was mainly driven by a sharp jump in gold imports, which almost doubled compared to March and registered an annual growth of 82 per cent. Higher core imports including electronics also contributed to the growth.The oil import bill grew at a relatively slower pace, reaching $18.6 billion during the fourth quarter of fiscal 2026 against an average of $13 billion. Although the Indian crude oil basket remained at $114 per barrel, oil import volumes declined 47 per cent year-on-year due to disruptions related to the closure of the Strait of Hormuz. A sharp decline in volumes has partially offset the impact of higher prices.
To secure supplies amid sanctions in the Strait of Hormuz, India increased purchases of Russian Ural crude following the temporary relaxation of US sanctions, according to data available till April.Also, higher oil prices boosted India’s petroleum exports, which increased 34 percent year-on-year despite ongoing restrictions on fuel exports. As a result, the country’s net oil import bill – calculated after subtracting oil exports from imports – remained relatively tight at around $9 billion.India’s total merchandise exports grew by 13.8 per cent year-on-year in April 2026, mainly supported by petroleum exports. Non-oil exports also recorded a healthy growth of 9 per cent, led by sectors such as electronics and engineering goods.However, trade flows with West Asia have weakened significantly due to the ongoing conflict in the region and the closure of the Strait of Hormuz. Some export shipments were re-routed through Singapore’s transshipment network, having previously been routed through the UAE.Changes in shipping routes and partial movement of Indian ships through the strait also changed import patterns. Imports from Saudi Arabia increased by 30.3 per cent, while purchases from UAE, Qatar, Kuwait and Iraq declined sharply by 34.6 per cent, 94 per cent, 84.4 per cent and 97 per cent respectively.Exports to the United States also declined, possibly reflecting the high base from advance shipment loading during the previous year.Meanwhile, India’s services exports maintained strong momentum, growing by 13.4 per cent year-on-year in April 2026, while services imports declined by 1.5 per cent. Net services exports increased to $20.6 billion compared to $15.9 billion in the same period last year, helping narrow the wide external trade imbalance.As a result, the combined goods and services deficit narrowed to $7.8 billion in April 2026 from $11.2 billion a year earlier.Looking ahead, the base estimate for India’s current account deficit in FY2027 will be 2.1 per cent of GDP, assuming an average crude oil price of $85 per barrel, according to HDFC Bank.The prolonged closure of the Strait of Hormuz and the continued rise in crude oil prices – recently hovering around $111 a barrel – remain risks to the outlook. However, recently introduced measures to curb gold imports may provide some relief, the bank said in a note.Analysts estimate that if prices remain unchanged, a 20 percent decline in gold import volumes could reduce the current account deficit by about 10 basis points of GDP, similar to the trend seen during the Russia-Ukraine conflict.Additionally, higher oil export earnings due to higher prices may help alleviate some of the pressure on the external account. The note said that at the moment, risks to the forecast appear to be broadly balanced.
