Context:

Exports fell about 7% to $38.9 billion in March as the Iran conflict intensified cost pressures and disrupted demand, undermining a fragile recovery amid lingering US tariffs. The slowdown was broad-based, with steep declines in key markets including a near 62% drop to UAE and a 21% fall to the US, and widespread weakness across sectors such as textiles, agricultural goods, chemicals, and electronics. Tariffs that priced Indian goods into the market by 50% earlier in the year amplified headwinds, though some relief came with a tariff cut to 18% in February. Industry leaders warned that recovery will be gradual, and meeting the 2030 export target now appears delayed by about two years. Overall, the year’s export momentum remains constrained, with a marginal annual uptick forecast for merchandise shipments.

Dive Deeper:

• March merchandise exports declined to $38.9 billion from $42.1 billion a year earlier, marking a broader weakness across major segments despite hopes for a rebound.

• Exports to the UAE plunged nearly 62% year-on-year, while shipments to the United States fell about 21%, signaling a widespread demand slowdown beyond the Middle East.

• Nomura highlighted a troika of headwinds: elevated costs from shipping and insurance, driven by the Iran conflict, and a deterioration in global demand that weigh on exporters.

• For the fiscal year ending March 2026, merchandise exports rose less than 1% to $441.78 billion, reflecting the drag from higher tariffs and the war’s disruption.

• U.S. tariffs, which had been 50% through August last year, were reduced to 18% in February, but the lingering impact of the tariff regime remains a restraint on growth.

• March imports fell 6.5% to $59.59 billion, aided by lower oil purchases; Citi noted the oil bill at $12.2 billion was the lowest in 13 months, with higher crude prices likely showing up with a lag.

• Industry leaders warned that even if the Middle East settlement materializes, a recovery could take at least two months to gain traction, underscoring persistent liquidity and cost pressures.