Trade deficit nearly 2x in Feb; exports face battlefield ahead

New Delhi: India’s February trade deficit almost doubled to $27 billion from $14.42 billion a year ago as imports rose 24%, led by gold and silver, and exports fell 0.81% to $36.61 billion. To be sure, the trade gap narrowed from $34.68 billion in January.

India’s trade deficit with China surged to $102 billion in April-February of the current fiscal year, from $91 billion a year ago, according to official data released on Monday.

Commerce secretary Rajesh Agrawal said the year had been difficult and would stay that way in March because of exporters getting squeezed by logistics bottlenecks due to the Gulf war.


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The government plans to announce measures to help exporters this week, he said. “In spite of challenges, merchandise exports are doing well. March is a challenging month because of logistics. One geography where exports are not happening and will see a southward trend,” Agrawal said, referring to West Asia.

Compared with January, goods exports were up a marginal 0.13%. Merchandise imports rose to $63.71 billion in February from $51.33 billion in the year before. Gold imports rose 218.5% to $7.4 billion and silver was up 285% to $1.6 billion due to higher industrial use. Imports of petroleum and crude products of $12.97 billion, electronics goods at $10.09 billion and machinery of $5.32 billion also contributed to the trade deficit.

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“Major drivers of merchandise exports growth in February were engineering goods, electronic goods, organic and inorganic chemicals, gems and jewellery and meat, dairy and poultry products,” the commerce and industry ministry said in a statement.

In February, exports of engineering goods were up 12.9% on-year, electronic goods 10.4%, and drugs and pharmaceuticals rose 3.4%. According to the data, 15 of the 30 key export sectors witnessed a fall in outbound shipments in February from the year earlier.

The US was the top destination for India’s goods exports, followed by the UAE, China, the Netherlands and the UK. On the import side, China remained India’s largest sourcing partner, followed by the UAE, Russia and the US.

“The escalating conflict in the Middle East involving the US, Israel and Iran has heightened global trade uncertainty,” said SC Ralhan, president, Federation of Indian Export Organisations. “Disruptions in key maritime routes, including the Strait of Hormuz and the Red Sea have forced vessels to reroute, increasing freight costs, insurance premiums, and transit times, thereby adding pressure on exporters.”

During April-February FY26, India’s merchandise exports reached $402.93 billion, registering a growth of 1.84%, while imports rose 8.53% to $713.53 billion.

The government plans to announce measures to help exporters this week, he said. “In spite of challenges, merchandise exports are doing well. March is a challenging month because of logistics. One geography where exports are not happening and will see a southward trend,” Agrawal said, referring to West Asia.

Compared with January, goods exports were up a marginal 0.13%. Merchandise imports rose to $63.71 billion in February from $51.33 billion in the year before. Gold imports rose 218.5% to $7.4 billion and silver was up 285% to $1.6 billion due to higher industrial use. Imports of petroleum and crude products of $12.97 billion, electronics goods at $10.09 billion and machinery of $5.32 billion also contributed to the trade deficit.

“Major drivers of merchandise exports growth in February were engineering goods, electronic goods, organic and inorganic chemicals, gems and jewellery and meat, dairy and poultry products,” the commerce and industry ministry said in a statement.

In February, exports of engineering goods were up 12.9% on-year, electronic goods 10.4%, and drugs and pharmaceuticals rose 3.4%. According to the data, 15 of the 30 key export sectors witnessed a fall in outbound shipments in February from the year earlier.