The West Asia war has taken a toll on India’s trade. Exports declined 7.4% year-on-year in March, and imports fell 6.5%, per the commerce ministry data. Trade figures with India’s top Gulf partners—the UAE, Saudi Arabia, Qatar, and Iraq—are bleeding red, weighing significantly on overall numbers.
India’s exports to the UAE and Saudi Arabia, which are among the top 20 trade partners, crashed 61.9% year-on-year and 45.7%, respectively, in March. In absolute terms, exports to the UAE declined to $1.3 billion in March from the monthly average of $3.3 billion over the previous 11 months of the fiscal. Exports to Saudi Arabia declined to $0.5 billion from the pre-war average of $0.9 billion.
On the import front, four countries featured in the top 20. India’s imports from the UAE, Saudi Arabia, Iraq, and Qatar declined 37.3% to 66.3% during the month. In absolute terms, imports from these four countries fell to $6.2 billion in March, down from the pre-war average of $11.4 billion.
This is not the first time that trade with Gulf nations has declined year-on-year, but the magnitude is unmatched, at least in recent years.
The West Asia conflict, which started on 28 February when the US and Israel attacked Iran, snowballed into a full-fledged war, leading to the closure of the Strait of Hormuz and crippling trade with West Asian countries.
Further, attacks on oil and gas infrastructure led to a massive energy crisis, severely impacting India. The limited data release offers a glimpse of the war's impact. Detailed release of the data, likely at the end of the month, will offer more insights.
The crash in trade value is also visible in how Gulf countries moved in India’s trading partner rankings. On the export side, the UAE slipped from India’s second-largest export destination in February to fourth in March, while Saudi Arabia fell sharply from sixth to 20th.
The impact on imports was equally stark. The UAE dropped from second to fourth, Saudi Arabia from fifth to eighth, Iraq from seventh to 16th, and Qatar from 18th to 20th.
While the data is limited, it shows that India’s top Gulf trade partners played a significant role in influencing the headline export and import numbers. Mint calculations show that a large part of the drag came from these key Gulf countries. The year-on-year change in exports would have been -1.5% (as against -7.4% overall) if the UAE and Saudi Arabia were excluded from the calculations.
Similarly, if the UAE, Saudi Arabia, Iraq, and Qatar are excluded, the y-o-y change in imports would have been 9.1% as opposed to (-)6.5%, underscoring the importance of these countries in India’s trade dynamics.
Overall, the Gulf countries—the UAE, Saudi Arabia, Qatar, Iraq, Bahrain, Kuwait, and Oman—account for about 14% of India’s exports and 19.5% of its imports. India relies heavily on these nations for oil and gas imports, with 40% of its imports coming from them alone. India is also a significant exporter of basmati rice to these countries, which is also taking a hit.