India’s trade gap widens as Trump’s tariff war roils markets

India’s trade deficit widened in March, even as policymakers and exporters in the South Asian nation scramble to shield themselves from US President Donald Trump’s global tariff war.

The gap between exports and imports stood at $21.54 billion last month, the trade data showed Tuesday, higher than the $15.5 billion deficit forecast by economists in a Bloomberg survey. The trade deficit in February had narrowed to $14.05 billion, the lowest in more than three years.

Exports rose 0.7% in March to $41.97 billion from a year earlier, while imports grew 11.4% to $63.51 billion, the data showed.

The reading comes as the South Asian nation rushes to evade the worst of Trump’s trade actions. Indian exporters have been urging New Delhi officials to seal a bilateral trade deal with the US as soon as possible.

In February, the two nations had agreed to conclude the first tranche of the pact by fall of this year. Despite these talks, Trump had slapped India with a 26% tariff rate on April 2, before announcing a 90-day pause. To help ease exporters’ concerns, India has set up a trade help-desk to provide real-time assistance on tariff changes.

The last financial year was “difficult” with rising geopolitical tensions, Commerce Secretary Sunil Barthwal told reporters at a press briefing in New Delhi. India’s overall exports crossed $820 billion in the financial year that ended in March, he added. Outbound shipments for the next year will depend on many factors, including how nations react to Trump’s tariffs, he said.

Oil imports grew to $19 billion in March from $11.8 billion the previous month, while gold imports rose to $4.4 billion last month from $2.3 billion in February.

India’s exports have been falling for months now. Expanding trade deficit may impact the rupee, which has been an outperformer among emerging-market Asian currencies, gaining 2% against the US dollar in March.

Deal Talks

Apart from hurrying to seal a deal with the US, India is negotiating free trade agreements with other major trading partners, including the EU and the UK. The next round of India-EU trade talks are scheduled for May 12-16, according to a presentation at the briefing.

“There are both concerns and opportunities for India this year,” said Barthwal. On US trade talks, New Delhi aims to “see negotiations close as quickly as possible,” he added. According to a senior official last week, India can reach a provisional trade agreement with the US in 90 days if the offers are mutually beneficial.

The South Asian nation has also formed a panel with officials from commerce and finance ministry to monitor dumping into India from regional rivals — including China, Vietnam and Indonesia — as trade tensions escalate, according to a presentation at the press briefing.