A considerable decline in imports has led to India’s goods trade deficit dropping to $14.05 billion in February from $22.9 billion in January, the lowest since August 2021, indicating a slowdown in economic activity. The fall in imports could signal a low domestic demand.
The Commerce Ministry reports that although exports fell 11% to $36.91 billion from $41.41 billion, imports dropped 16% to $50.96 billion from $60.92 billion.
Additionally, the Commerce Ministry has analysed that monthly trade deficits range between $15 billion and $25 billion, at times reaching $30 billion. In comparison, February’s deficit of $14 billion is unusually low.
Factoring in both products and services, India reported an overall trade surplus of $4.5 billion in February for the first time since May 2021. As a result, India may record a $20 billion current account surplus for the January–March quarter.
Experts, according to a business portal, attributed the dip in imports to a high base effect, lower crude prices, and reduced gold imports.
The full-year current account deficit (CAD) could drop to 0.5%-0.7% of GDP, down from earlier estimates of 1%-1.2%.
The current fiscal year has seen a 6.43% increase in non-petroleum exports. Nevertheless, between April 2024 and February 2025, overall merchandise exports climbed by just 0.06% year-over-year, and imports soared by 5.71%. As a result, the total trade deficit increased by 16.86% from the previous year.
Despite challenges in the gem and jewellery industry, the Commerce Ministry is optimistic that India’s total exports will exceed $800 billion this fiscal year, up from $778 billion the previous year. Coffee exports have grown significantly. The business portal reported that non-petroleum trade remains a driver at 6% growth.
Since the US intends to impose reciprocal tariffs on trading partners starting April 2, the future for India’s product exports is still unclear. Imports of steel and aluminum are already subject to a 25% tax imposed by the US. Experts suggest that American importers are delaying purchases in fear of more levies.
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