India's trade deficit narrows to $27 billion in February

Cumulatively, India’s merchandise trade deficit is at $310.6 billion in April to February of 2025-26, significantly higher than the $261.8 billion during the same period last year.

India's merchandise trade deficit narrowed to $27.1 billion in February from $34.68 billion in January.

Goods exports rose marginally to $36.61 billion from $36.56 billion in January, while imports fell to $63.71 billion from $71.24 billion during the same period.

However, on a year-on-year basis, the trade gap in goods in February was significantly wider from $14.42 in the same month last year.

This is because while goods exports were slightly down last month by 0.8 percent on a year-on-year basis, merchandise imports rose over 24 percent.

The increase in imports can be primarily attributed to a spike in gold and silver shipments in value terms.

India’s gold imports surged 218.55 percent year-on-year to $7.45 billion in February, while outbound shipments of silver jumped 285.23 percent to $1.66 billion during the month.

"This year has been one challenge after another for trade, Commerce Secretary Rajesh Agrawal told reporters, adding the ongoing crisis in West Asia may lead to a reduction in merchandise exports in FY26, especially to the Gulf region.

In February key drivers of growth in goods exports include engineering goods, electronic goods, organic and inorganic chemicals, gems and jewellery, and meat, dairy and poultry products.

Engineering goods exports grew 12.90 percent on-year, while electronics rose 10.4 percent.

Exports of organic and inorganic chemicals increased 6.85 percent, and gems and jewellery exports grew 4.1 percent. Meanwhile, meat, dairy and poultry products recorded a growth at 22.7 percent.

In February, outbound shipments of goods to the US, India's largest export market, rose about 3.5 percent on-month ​to $6.9 billion, but fell nearly 13 percent on-year.

Cumulatively, India’s merchandise trade deficit is at $310.6 billion in April to February of 2025-26, significantly higher than the $261.8 billion during the same period last year.

Agrawal added, despite the challenges, goods and services exports combined is at $790.86 billion dollars for the first 11 months of FY26, 5.8 percent higher on-year.

This has led to an overall trade deficit of $109.6 billion so far, this fiscal, an increase of about $19 billion from the same period last year.

The on-year increase is entirely due to a spike in gold and silver imports, Agrawal said.

Commenting on the latest trade figures, SC Ralhan, President of the Federation of Indian Export Organisations (FIEO), said escalating tensions in West Asia involving the United States, Israel and Iran have increased global trade uncertainty, with disruptions in key routes such as the Strait of Hormuz and the Red Sea raising freight costs, insurance premiums and transit times for exporters.

Despite these challenges, he said India’s export sector remains resilient, supported by diversified markets and strong performance across key sectors, adding that continued market diversification, smooth logistics and timely policy support will be crucial to sustain growth in outbound shipments.