New Delhi: India’s merchandise trade deficit narrowed in February as imports moderated from the previous month, though elevated purchases of energy, gold and electronics continued to weigh on the overall trade balance, even as geopolitical tensions in West Asia pushed up freight costs and added uncertainty to global trade flows.
The gap between imports and exports stood at $27.1 billion in February, compared with a deficit of $14.42 billion in February 2025, according to provisional estimates released by the ministry of commerce and industry on Monday.
The February deficit is lower than the $34.68 billion recorded in January, when a sharp rise in imports widened the trade gap to the highest level in several months.
Merchandise exports in February stood at $36.61 billion, compared with $36.91 billion in February 2025, while imports stood at $63.71 billion against $51.33 billion in the year-ago month.
On a month-on-month basis, exports increased by about 0.14% to $36.61 billion against $36.56 billion recorded in January 2026, while imports declined to $63.71 billion compared with $71.24 billion in the previous month, when higher commodity purchases had pushed up the import bill.
West Asia conflict impact
Escalating tensions in West Asia have disrupted key maritime routes through the region and pushed up shipping costs. Exporters have flagged higher freight rates, insurance premiums and longer transit times as emerging risks for shipments to Europe, Africa and parts of the Americas.
Industry executives said sectors such as petroleum products, chemicals, engineering goods and agricultural commodities could face logistical challenges if disruptions in the Red Sea and surrounding routes persist.
Services exports cushion
Despite volatility in merchandise trade, India’s services exports continued to provide a cushion to the overall trade balance.
Services exports in February stood at $39.53 billion, compared with $31.65 billion in February 2025, while services imports stood at $16.38 billion, against $14.51 billion a year earlier.
Sequentially, services exports declined by about 9.95% to $39.53 billion from $43.90 billion recorded in January 2026, when the sector had posted strong growth.
Including services, total exports (goods and services) in February stood at $76.13 billion, compared with $68.56 billion in February 2025, while total imports stood at $80.09 billion against $65.84 billion a year earlier.
The overall trade balance shifted to a deficit of $3.96 billion in February, compared with a surplus of $2.72 billion in February 2025.
FY26 trade trends
For the April 2025–February 2026 period, cumulative exports increased to $790.86 billion, compared with $747.58 billion in the corresponding period of the previous fiscal.
Total imports during the period rose to $900.51 billion from $838.69 billion a year earlier, widening the overall trade deficit to $109.64 billion, compared with $91.11 billion in the same period last year.
Merchandise exports during the first 11 months of the fiscal stood at $402.93 billion, compared with $395.66 billion a year earlier, while merchandise imports rose to $713.53 billion from $657.46 billion, indicating continued demand for energy, electronics and industrial inputs.
Services exports during April–February stood at $387.93 billion, up from $351.93 billion in the year-ago period, while services imports increased to $186.98 billion from $181.23 billion.
Economists said the February numbers provide an early indication of whether rising shipping costs, geopolitical tensions and commodity price volatility are beginning to weigh on India’s trade momentum in the closing months of the financial year.
While export demand remains relatively resilient in sectors such as engineering goods, electronics, pharmaceuticals and marine products, sustained pressure from energy and gold imports could keep the merchandise trade deficit elevated in the near term.