India’s trade deficit widened in April by more than analysts had expected as the surge in oil and gas prices hiked the Indian energy import bill.
Trade deficit jumped to $28.38 billion last month, according to data from the Ministry of Commerce and Industry published on Friday. The trade gap in April widened by $8 billion compared to the $20.6 billion deficit in March, and was higher than economists had expected at about $26 billion.
India’s total exports grew by 13.8% in April from a year earlier to hit $43.56 billion, the data showed.
However, the value of imports soared as international oil and gas prices jumped amid the Middle East conflict that forced India and every other major crude oil importer to source more expensive supply from producers not dependent on the Strait of Hormuz, which remains closed to most tanker traffic two and a half months after the Iran war began.
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The widening trade deficit and the soaring energy import bill are pressuring the government’s current account and finances, as the oil supply crisis is already seeping through India’s economy.
Since the war began and cut off over 40% of India’s crude oil flows, those that passed through the Strait of Hormuz, one of the highest-flying economies in Asia has seen its oil import bill soar, investors fleeing the capital market, and the local currency plunging to an all-time low against the U.S. dollar.
Analysts have started to raise inflation estimates and reduce forecasts of this year’s economic growth in India, which is beginning to feel the oil supply shock well beyond the actual disruption of deliveries of oil, LNG, and liquefied petroleum gas (LPG), the primary cooking fuel in the world’s most populous country.
The oil shock that the war has created will weigh on India’s economic growth in the current fiscal year to March 2027. BMI, part of Fitch, expects India’s GDP growth to slow to 6.7% in the 2026/2027 fiscal year, down from 7.7% in 2025/2026, largely due to the oil price shock.
By Charles Kennedy for Oilprice.com
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