In February 2025, the merchandise trade deficit narrowed to $14.05 billion due to a sharp decrease in merchandise imports. This could be partly due to a shorter month and the back-end of import reporting to next year. Key export contributors were Engineering Goods ($9.08 Billion).
Petroleum Products ($5.81 Billion), Electronic Goods ($3.79 Billion), Gems & Jewellery ($20.7%), Drugs & Pharmaceuticals ($2.47 Billion), and Organic & Inorganic Chemicals ($2.23 Billion). Top export destinations for February 2025 were the United States ($7.91 Billion).
United Arab Emirates ($3.28 Billion), the Netherlands ($1.93 Billion), China ($1.26 Billion), UK ($1.17 Billion), Saudi Arabia ($1.06 Billion), and Singapore ($1.65 Billion). Top import originating nations were China ($8.72 Billion), United Arab Emirates ($5.21 Billion), Russia ($3.66 Billion), United States ($3.55 Billion).
Saudi Arabia ($2.16 Billion), Iraq ($1.79 Billion), and Singapore ($1.65 Billion). Over the last 12 months, the average merchandise exports stood at $36.70 Billion, while average merchandise imports stood at $59.70 Billion. For February 2025, exports are at par with the 1-year average, while imports are sharply lower than the average.
The average trade deficit in the last 12 months stood at $23 Billion, with the February 2025 trade deficit sharply lower at $14.05 Billion. The services trade surplus wiped out the merchandise trade deficit and resulted in a net overall trade surplus of $4.43.
Billion, making the current account deficit more palatable in FY25. The overall trade deficit (combining merchandise deficit and services surplus) at $(89.36) Billion is 16.9% higher on a yoy basis, attributed to the trade uncertainty surrounding the aggressive reciprocal tariff policy proposed by Donald Trump.
India’s trade deficit for February 2025 narrowed to just $14 billion, marking a significant improvement compared to previous months. This decline is primarily attributed to a notable reduction in imports, particularly in crude oil, gold, and electronic goods.
According to official data from the Ministry of Commerce and Industry, merchandise exports stood at $38 billion, reflecting stable demand for Indian goods in global markets. However, imports witnessed a sharper contraction, declining to $52 billion, largely due to softening commodity prices and luxury and non-essential goods.
The drop in crude oil imports was a key contributor to the narrowing trade gap. With global oil prices experiencing a downward trend, India’s energy import bill reduced substantially. Additionally, government measures promoting alternative energy sources and domestic production further aided the decline in crude imports.
Gold imports also saw a dip as investors shifted their focus towards other asset classes amid fluctuating global economic conditions. The reduction in demand for electronics, including smartphones and consumer appliances, was another major factor influencing the decline in overall imports.
Despite these positive trends, experts caution that the lower trade deficit may also indicate slowing domestic demand, which could impact economic growth in the long term. The government, however, remains optimistic that ongoing policy initiatives, including the Make in India campaign and export promotion schemes, will sustain momentum in India’s trade sector.
Going forward, analysts expect trade patterns to be influenced by global economic stability, geopolitical developments, and policy measures aimed at bolstering domestic manufacturing and exports. The narrowing trade deficit is a welcome sign, but sustaining this trend will depend on India’s ability to balance export growth with controlled imports.
India’s trade deficit in February 2025 narrowed to $14 billion, driven by a decline in imports. The reduction in the trade gap was primarily due to lower crude oil imports and a dip in non-essential goods purchases. Meanwhile, exports remained stable, supported by strong demand for engineering goods, pharmaceuticals, and electronics.
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