Total imports declined about 6 per cent month-on-month to $59.6 billion, while exports rose 6 per cent to $38.9 billion. Net services exports remained robust at $18.2 billion in March, with FY26 recording a healthy growth of 13 per cent, helping offset the higher goods deficit.

The reduction in the goods trade deficit was largely attributed to a steep fall in gold and silver imports, which dropped 59 per cent and 63 per cent month-on-month, respectively.

Oil imports also declined around 6 per cent MoM despite higher prices, likely due to a 35-40 per cent drop in volumes following disruptions linked to the Strait of Hormuz closure. Oil export earnings, however, surged 51 per cent MoM to $5.2 billion, reaching their highest level since May 2025, supported by a spike in global refined product prices.

Exports to Saudi Arabia and the United Arab Emirates fell 44 per cent and 60 per cent MoM, respectively, amid regional tensions, contributing to a 22 per cent decline in gems and jewellery exports.

The report noted that FY26 exports grew modestly by 1 per cent, with the impact of US tariffs mitigated through diversification of export destinations.

Looking ahead, it projected a baseline scenario for FY27 with Brent crude at $80 per barrel, estimating a current account deficit of about 1.7 per cent of GDP and a balance of payments shortfall exceeding $35 billion.

While services exports remained resilient in FY26, supported by global capability centres, they may face headwinds in FY27 if global growth slows due to prolonged geopolitical tensions in the Middle East.