External sector pressures are building up for the Indian economy amid a volatile global backdrop, with recent data from the Finance Ministry's Monthly Economic Review for March 2026 pointing to a deterioration in trade dynamics, widening imbalances, and emerging stress from capital flows and commodity prices. According to the review, India's merchandise trade performance has weakened at the margin even as import demand has surged sharply. The report noted that "merchandise exports declined marginally by 0.8 per cent (YoY)," reflecting subdued external demand conditions and the impact of global uncertainties. In contrast, import growth has been significantly stronger, with the review highlighting that "imports have increased by 24.1 per cent (YoY), widening the merchandise trade deficit considerably."