India’s goods trade deficit narrows to $14.05 bn in February, lowest since August 2021

Trade deficit narrows in February

India’s merchandise trade deficit in February drastically narrowed to $14.05 billion in February compared with nearly $23 billion in January as imports contracted at faster clip versus exports.

On a year-on-year basis too, the trade gap in goods was narrower compared to $19.51 in February 2024.

Moreover, the commerce ministry pointed out that the deficit in February is the lowest since August 2021 due to a decline in imports and exports relatively holding up.

While merchandise exports fell 10.9 percent on-year in February to $36.91 billion, goods imports decreased by a larger 16.35 percent to $50.96 billion, according to provisional data released by commerce ministry on March 17.

"Despite being a difficult year in terms of trade, India's overall exports is positively moving towards crossing $800 billion in FY25," Barthwal added.

Major drivers of growth in merchandise exports in February 2025 included electronic goods that increased 26.46 percent on-year, ready-made garments, up 3.97 percent, and outbound shipments of rice, which rose 13.21 percent.

Citing the double-digit contraction in goods exports, Ashwani Kumar, President of the Federation of Indian Export Organisations (FIEO) said that the dip was primarily due to subdued global demand and ongoing challenges faced by key sectors, including the impact of the tariff war.

FIEO urged the government to introduce targeted support aimed at boosting exports, including expanding the scope of the Production-Linked Incentive (PLI) scheme and improving access to competitive financing for exporters.

Kumar also highlighted the importance of resolving non-tariff barriers and enhancing market access, as well as strengthening India’s integration into global value chains to ensure sustained growth in exports.

On a cumulative basis, merchandise exports during April-February of the current fiscal stood at $395.63 billion as compared to $395.38 billion during the same period of 2023-24, while goods imports came in at $656.68 billion versus $621.19 billion.

Merchandise trade deficit during April-February of 2024-25 was $261.06 billion wider than $225.81 Billion during the same period of the previous financial year.

On the other hand, India's services exports is estimated at $35.03 billion in February, up 23.6 percent on-year, while its imports counterpart is seen at $16.55 billion, down 8.67 percent.

Therefore, India's overall trade is in surplus (services and goods) for the previous month, estimated at $4.43 billion.