The finance ministry’s July 2026 Monthly Economic Review highlighted India’s ability to shield its external sector from the West Asia conflict. India’s trade with that region fell sharply, but the country quickly found other sources.
West Asia contributed 15% of India’s merchandise exports and 21.4% of imports in FY25. When the conflict started, Indian firms shifted sourcing and markets to keep supplies steady.
Import volumes from West Asia dropped 51.6% in March 2026, easing to 31.7% in April and 17.7% in May. Despite these falls, total imports grew in April and May because of higher purchases from Latin America, North East Asia, the CIS, Baltics, North America and West Africa.
India increased imports from Russia, Brazil, Peru, Venezuela, China, South Korea and Nigeria. This helped keep key commodities available domestically.
Energy sourcing changed notably. While the value of crude oil imports from West Asia rose, its share of total imports fell from 54.9% in February 2026 to 30.8% in May 2026. Imports from Russia, Venezuela and Nigeria grew sharply.
Within West Asia, India bought more crude oil from Oman and the UAE, but reduced purchases from Iraq and Kuwait. This shows a reallocation inside the region rather than a blanket cut.
India also diversified imports of petroleum products, inorganic chemicals and fertilisers, sourcing more from the US, Russia, Trinidad, China, Japan, Canada, Georgia and South Korea.
Exports to West Asia fell 56.5% in March, 27.3% in April and only 2% in May. However, overall exports recovered in April and May as shipments moved to other markets.
Petroleum products saw the biggest export shift, with higher sales to Singapore, South Africa and Tanzania. West Asia’s share in India’s petroleum product exports fell from 18.7% in February to 4% in May.
Exporters expanded sales of telecom instruments, electrical machinery, pharmaceuticals, copper products and motor vehicles to the United States, Malaysia, Austria, Mexico, South Africa and the UK.
Commodities like basmati rice, pearls and precious stones did not benefit as much from diversification. Higher exports to other destinations could not fully replace the weaker demand from West Asia.
Only three major export categories—gold and other precious metal jewellery, buffalo meat, and ships, boats and floating structures—recorded growth in exports to West Asia during February–May 2026.
The review concluded that India’s merchandise trade performance from February to May 2026 shows the resilience of its external sector. Diversification and timely policy actions helped mitigate the conflict’s impact.