India’s trade deficit narrows in February, lowest since August 2021

India’s trade deficit narrowed to $14.05 billion in February 2025, the lowest in three-and-a-half years, as imports declined sharply while exports remained steady. This marked a significant improvement from the $23 billion deficit recorded in January, according to data from the Ministry of Commerce and Industry. Merchandise exports saw a slight rise from $36.43 billion in January to $36.91 billion in February, while imports fell from $59.42 billion to $50.96 billion, primarily due to reduced purchases of gold and petroleum products. Officials noted that this was the lowest trade deficit since August 2021.
On a year-on-year basis, both exports and imports declined in February. Exports fell 10.86% from $41.41 billion in February 2024 to $36.91 billion in February 2025, while imports contracted at a sharper rate of 16.34%, totaling $50.96 billion. Commerce Secretary Sunil Barthwal acknowledged the challenges in FY 2024-25 but remained optimistic that overall exports, including both merchandise and services, would exceed $800 billion. Cumulative exports for April-February 2024-25 stood at $750.53 billion, a 6.24% increase from the same period last year.
Addressing concerns about US tariff adjustments, Barthwal reportedly stated that the government is engaging with stakeholders to mitigate potential challenges. The Federation of Indian Export Organisations (FIEO) President Ashwani Kumar attributed the decline in exports to weak global demand and trade disruptions. However,he noted that falling imports could provide growth opportunities for domestic industries.
According to information, key export sectors such as electronic goods, rice, and processed minerals showed resilience, but engineering goods exports declined 8.6% year-on- year to $9.08 billion. Engineering Export Promotion Council (EEPC) India Chairman Pankaj Chadha highlighted that rising global protectionism could further impact India’s trade.
According to recent estimates, India and Thailand could face tariff increases of 4 to 6 percentage points if the US implements proposed trade policy changes, potentially leading to annual losses of around $7 billion. As per an official report, India’s exports to the US were valued at approximately $74 billion in 2024, covering sectors like jewellery, pharmaceuticals, and petrochemicals. However, India’s import tariffs have remained considerably higher, averaging 11% in 2023—around 8.2 percentage points above US tariffs on Indian goods.
Analysts suggest that India’s ability to adapt to shifting trade dynamics will be crucial in mitigating risks and capitalizing on emerging global market prospects.

(Business Correspondent)