The Iran war has taken a toll on India’s merchandise exports, dragging them down by more than 7% in March, and dashing hopes of a recovery in a year already marred by U.S. tariffs. Experts warn that conditions could worsen before improving.
India’s goods exports fell to $38.9 billion last month, from $42.1 billion a year earlier, according to data released Wednesday by its commerce ministry.
The slowdown was sharp across key markets. Shipments to the UAE, India’s second‑largest export destination, plunged nearly 62% year on year, while those to its biggest market, the U.S., dropped 21%.
“There has been broad‑based weakness across key export categories — with agricultural goods, textiles, chemicals, electronic goods, and gems and jewellery all registering negative growth,” global brokerage Nomura said in a report on Wednesday.
For the financial year ending March 2026, goods exports rose by less than 1% to $441.78 billion, underscoring the damage caused by 50% U.S. tariffs that were in force from August last year until earlier this year. The U.S. cut tariffs on Indian goods to 18% in February.
“U.S. tariffs were a bigger drag on Indian exports this year,” Ajay Sahai, director‑general and CEO of the Federation of Indian Export Organizations, told CNBC’s “Inside India” on Thursday, adding that the Iran war had become a fresh source of uncertainty for exporters.
Sahai said multiple factors had slowed export growth and that India was unlikely to meet its target of achieving $2 trillion in exports by 2030, pushing it by about two years.
India set out that ambitious exports target in 2022, including goods as well as services. Merchandise exports hit a record $451 billion in the financial year ending March 2023, but have failed to surpass that level since.