India’s merchandise trade deficit narrowed to $27.1 billion in February as imports declined from the previous month, offering a modest relief to the country amid rising global uncertainty over the Middle East, government data showed on Monday.
Economists had expected a trade deficit of $28.8 billion for February, according to a Reuters poll, down from $34.68 billion in January.
Merchandise exports rose slightly to $36.61 billion in February from $36.56 billion in January, while imports fell sharply to $63.71 billion from $71.24 billion, according to figures released by the commerce ministry.
Officials warned that escalating tensions around the Strait of Hormuz—a critical route for global oil and gas shipments—could disrupt trade flows and drive up prices for India, which relies heavily on Middle Eastern energy supplies.
“This year has been challenging for Indian exports, and there are logistical challenges due to the West Asia crisis,” said Rajesh Agrawal, India’s trade secretary, noting that the government is considering measures to support affected exporters.
India, the world’s third-largest oil consumer, imports more than 80% of its crude oil and 60% of its cooking gas from abroad, with the Middle East accounting for a significant portion of these supplies. The government has advised consumers against panic buying of cooking gas and is exploring an “economic stabilisation fund” to mitigate global headwinds.
On exports, shipments to the United States—India’s largest export market—rose about 3.5% month-on-month to $6.83 billion in February, bringing cumulative exports to $79.29 billion between April and February. A U.S. Supreme Court decision in February, overturning certain Trump-era tariffs, has eased duties on Indian textiles, jewellery, and food products, benefiting exporters.
However, policymakers remain cautious, as U.S. trade investigations into excess industrial capacity affecting India and 15 other countries could weigh on exports in the coming months.
On the services front, India estimates exports at $31.65 billion and imports at $14.51 billion for February, resulting in a surplus of $17.14 billion, according to Reuters calculations based on government data. Detailed services trade statistics are published monthly by India’s central bank with a one-month lag.