India’s Middle East trade drops 50% in March as Iran war bites

India’s trade with the Middle East plunged over 50% in March, with USD 3.5 bn in Indian exports to the region wiped out in March due to the Iran war and blockade of the Strait of Hormuz, Economic Times reports, citing India’s Commerce Secretary Rajesh Agrawal. This decline came despite India’s merchandise trade deficit narrowing to a nine-month low of USD 20.6 bn in March, as strong demand from the US offset disruptions from the war, according to data from the Trade Ministry.

Why it matters: With annual India-Middle East trade valued at USD 178 bn, these early warning signs suggest global disruptions may continue through April. A persistent blockade of Hormuz has stirred up a war tax — with rising freight and ins. premiums — on India-Middle East trade as goods face longer transit times and uncertainty.

In value terms: Exports to the region fell 57.9%, while imports saw a 51.6% downturn. The slump in India’s monthly exports to the region — typically around USD 6 bn — impacted gems and jewelry, engineering goods, electronics, petroleum products, and food products.

Imports ease on lower oil, gold: India’s merchandise imports in March declined 6.5% m-o-m to USD 59.5 bn, driven by a USD 12.1 bn (36% y-o-y) dip in oil purchases and a 31.6% fall in gold imports as supplies from the Gulf remained constrained.

Oman featured among the top five import sources in March, marking an expansion of 112% y-o-y while displacing the UAE, which was the third-largest import source in February. This highlights the impact of the Hormuz blockade on India’s trade dynamics with the Gulf region.

MEANWHILE- India’s gems and jewelry exports to the UAE climbed 23.7% and to Hong Kong 33.5%, providing some relief. The sector’s total exports fell 3.3% y-o-y to USD 27.72 bn in FY 2026, their lowest in five years, according to a Gem and Jewellery Export Promotion Council press release (pdf).

US demand cushions shock: India’s total exports climbed to USD 38.9 bn, with US shipments jumping 17.4% m-o-m to USD 8 bn, on the back of tariff cuts boosting textile and engineering exports.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)