India’s merchandise trade deficit moderated in February 2026, declining to $27.1 billion from $34.68 billion recorded in January. The improvement was driven by stable export performance and a notable contraction in imports during the month.
Monthly Improvement in Trade Balance
The narrowing of the deficit reflects a combination of marginal export growth and reduced import volumes. Goods exports in February stood at $36.61 billion, slightly higher than $36.56 billion in the previous month.
Imports, however, saw a sharper decline, falling to $63.71 billion from $71.24 billion in January, contributing significantly to the improved trade balance.
Despite this sequential improvement, the deficit widened on a year-on-year basis compared to $14.42 billion in February of the previous year.
Surge in Precious Metals Imports
The year-on-year expansion in the trade gap was largely influenced by a sharp increase in precious metals imports. Gold imports surged by over 218% to $7.45 billion during the month, reflecting strong domestic demand.
Additionally, silver exports recorded a substantial rise of over 285%, reaching $1.66 billion. These movements indicate heightened activity in the precious metals segment, impacting overall trade dynamics.
Sectoral Drivers Supporting Exports
Several key sectors contributed to sustaining export growth. Engineering goods recorded a 12.9% increase, while electronics exports grew by 10.4%.
Organic and inorganic chemicals rose by 6.85%, and gems and jewellery exports increased by 4.1%. Notably, meat, dairy, and poultry products emerged as the fastest-growing segment, with a 22.7% rise.
These sectors played a crucial role in maintaining export stability amid fluctuating global conditions.
Export Trends to the United States
The United States remained India’s largest export destination during the month. Exports to the US rose 3.5% sequentially to $6.9 billion.
However, on a year-on-year basis, exports to the US declined by nearly 13%, highlighting evolving demand patterns and broader geopolitical and economic uncertainties affecting global trade flows.
Summary
India’s trade deficit narrowed to $27.1 billion in February 2026, supported by steady exports and a decline in imports. While the monthly trend indicates improvement, the deficit remains elevated on a year-on-year basis due to a sharp rise in gold imports. Export growth was led by sectors such as engineering, electronics, and agri-products, with mixed performance observed in key markets like the United States.
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