India’s merchandise trade deficit for February 2026 stood at $27.1 billion, according to provisional data released by the Ministry of Commerce on Monday. While the gap widened significantly compared to the $14.42 billion recorded in the same month last year, it showed a notable recovery from the $34.68 billion deficit seen in January 2026.
The Import-Export Balance
The narrowing of the deficit on a month-on-month basis was driven by a moderation in overall imports, even as certain sectors like gold and energy remained elevated.
- Merchandise Exports: Remained resilient at $36.61 billion, showing a marginal month-on-month increase of 0.14% from January ($36.56 billion), though down slightly from $36.91 billion a year ago.
- Merchandise Imports: Dropped to $63.71 billion from $71.24 billion in January, a decrease of over 10% in just 30 days.
- Services Cushion: Services exports provided a vital buffer, jumping to $39.53 billion, which helped the “overall” (merchandise + services) trade deficit settle at a manageable $3.96 billion.
Key Pressure Points: Gold and Conflict
Despite the monthly improvement, the trade balance remains under pressure from two primary factors:
- Precious Metals Surge: Imports of gold and silver continued to weigh heavily on the bill. Cumulative gold imports for the April–January period reached $61.46 billion, fueled by local wedding demand and a flight to safe-haven assets.
- The West Asia Crisis: Commerce Secretary Rajesh Agrawal warned that the ongoing US-Iran war is creating a “logistics bottleneck.” With the Strait of Hormuz currently a high-risk zone, freight costs and insurance premiums have spiked, threatening to impact the March export figures.
Fiscal Year Performance (April–February)
With only one month left in the 2025-26 fiscal year, India’s cumulative trade performance shows steady growth despite the “geopolitical winter”:
| Metric (Apr–Feb) | FY2025-26 | FY2024-25 | Growth |
| Merchandise Exports | $402.93 Billion | $395.66 Billion | ↑ 1.84% |
| Merchandise Imports | $713.53 Billion | $657.41 Billion | ↑ 8.53% |
| Overall Exports (Incl. Services) | $790.86 Billion | $747.58 Billion | ↑ 5.80% |
Looking Ahead
The government is reportedly considering fresh support measures for exporters to the Middle East to offset the rising cost of shipping. However, the outlook for March remains cautious. If oil prices continue to hover near $100 per barrel due to the conflict, the cooling of the import bill seen in February may be short-lived.
