India’s merchandise trade deficit declined to $27.1 billion in February 2026, improving from $34.68 billion recorded in January. The moderation was primarily driven by a reduction in imports, along with steady export performance during the month.
Sequential Improvement in Trade Balance
The latest data reflects a narrowing of the trade gap on a month-on-month basis. Exports rose marginally to $36.61 billion in February, compared to $36.56 billion in January.
Imports, however, registered a sharper decline, falling to $63.71 billion from $71.24 billion in the previous month. This contraction in imports played a key role in easing the overall trade deficit.
Despite the monthly improvement, the deficit widened significantly on a year-on-year basis from $14.42 billion recorded in February of the previous year.
Precious Metals Driving Import Surge
The annual increase in the trade deficit was largely attributed to a spike in precious metals imports. Gold imports surged sharply by over 218% to $7.45 billion, reflecting strong domestic demand and higher global prices.
At the same time, silver exports recorded a substantial rise of over 285%, reaching $1.66 billion, indicating increased activity in the bullion segment.
Key Export Growth Segments
Several sectors contributed to sustaining export momentum during the month. Engineering goods exports grew by 12.9%, while electronics registered a 10.4% increase.
Organic and inorganic chemicals rose by 6.85%, and gems and jewellery exports expanded by 4.1%. Notably, meat, dairy, and poultry products emerged as the fastest-growing segment, recording a 22.7% increase.
These sectors helped stabilise export performance despite global uncertainties and fluctuating demand.
Trends in US-Bound Exports
The United States continued to be India’s largest export destination. Exports to the US rose 3.5% on a monthly basis to $6.9 billion.
However, on a year-on-year basis, exports to the US declined by nearly 13%, reflecting evolving global demand patterns and geopolitical headwinds.
Summary
India’s trade deficit narrowed to $27.1 billion in February 2026, supported by a decline in imports and stable export levels. While the month-on-month trend shows improvement, the deficit remains elevated compared to last year due to a surge in gold imports. Export growth was driven by sectors such as engineering, electronics, and agri-products, with mixed trends observed in key markets like the United States.
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