Crisil Economy First Cut: Shadows lengthening

India’s goods exports contracted 7.4% on-year to $38.9 billion in March (vs 0.3% average growth in the three months ended February), partly due to a high base driven by frontloading of exports last year in anticipation of US tariff hikes. The impact of the West Asia conflict was also clearly visible in the March trade data. The decline in exports was led by a 29.3% drop in gems and jewellery exports. Petroleum exports, however, remained buoyant, clocking 5.7% on-year growth. This could partly be a reflection of the significant rise in crude oil prices (Brent at $95.6/bbl in March vs $70.7/bbl last year and $68.0/bbl in February) and also a likely diversion of some petroleum exports to other Asian markets.

The impact of the West Asia conflict was also visible in India’s imports, which contracted 6.5% on-year to $59.6 billion in March. This was led by a 35.9% decline in India’s crude oil imports and a 17.8% decline in gems and jewellery imports. India’s fertiliser imports—of which West Asia is a key supplier—were also impacted as the growth slumped to a mere 2.2% on-year in March, compared with an average 26.1% growth in previous three months.