India's trade gap widens as oil bill jumps

The April deficit rose to $28.38 billion as the Middle East conflict pushed crude prices higher and added pressure on the rupee.

India’s trade deficit widened sharply in April, rising to $28.38 billion from $20.6 billion in March, government data showed Friday. The increase was driven by a larger import bill, especially crude oil, as the US-Israel-Iran war disrupted supplies and lifted prices.

WHY IT MATTERS

A wider trade deficit means India is spending more dollars on imports than it earns from exports. That adds pressure on the rupee, which has already fallen to a record low against the dollar. For households, the risk is direct: higher oil costs can raise fuel prices, transport costs, and inflation.

In numbers

• $28.38 billion: India’s trade deficit in April
• $20.6 billion: trade deficit in March
• $114+ a barrel: average price of India’s crude oil basket last month
• 61%: rise in crude basket price from the previous financial year
• Rs 96 per dollar: the rupee level breached after the data
• Third: India’s rank among the world’s largest oil importers

In-depth

Oil is the main stress point. India is the world’s third-largest oil importer and relies heavily on crude flows through the Strait of Hormuz. The route was blocked for more than two months, pushing up the cost of supplies. India’s crude oil basket averaged more than $114 a barrel last month, about 61 per cent higher than the previous financial year.

The wider deficit is now feeding into currency pressure. The rupee, already Asia’s worst-performing currency so far in 2026, fell to a record low after the trade data, dropping below 96 to a dollar.

The impact is spreading beyond trade. The war is weighing on growth, lifting inflation risks, and weakening India’s balance of payments. Policymakers have begun emergency steps, including raising retail fuel prices and tightening gold imports to support the rupee. Prime Minister Narendra Modi has also urged citizens to cut fuel use and avoid gold purchases for a year.

BIG PICTURE

The wider question now is whether the pressure eases if oil supplies normalise — or whether India is entering a longer period of expensive imports and a weaker rupee.

- Ends