India's trade deficit narrowed to $20.67 billion in March from $27.1 billion in February as Middle East conflict disrupted shipments. The Ministry of Commerce and Industry data showed exports fell 7.4% to $38.92 billion while imports declined 6.5% to $59.59 billion. Economists had forecast a $28.5 billion deficit, making the actual figure notably better than expected.

The data reflects the first full month of impact from the Middle East crisis that erupted in February. India, which imports about 90% of its crude oil and over half its liquefied petroleum gas, saw Brent crude surge as much as 65% in early March to above $100 a barrel after US and Israeli strikes on Iran. While prices have since retreated, they remain more than 30% higher than before the conflict.

The rupee has weakened 2.6% since the war began, and prolonged high energy prices risk straining India's current account and pressuring the currency. The government has taken steps to support exporters serving Middle Eastern markets, though concerns persist that a prolonged conflict will weigh on trade prospects for the fiscal year.