India’s merchandise trade deficit narrowed to $27 billion in February compared to $34.7 billion in January. However, year-on-year, the deficit during the month doubled from $14.5 billion in February last year. Merchandise exports during February remained flat at $36.61 billion compared with $36.91 billion in the year-ago period, showing a less-than 1% decline. Goods imports during the month rose by 24% year-on-year. Services exports increased by 25% to $39.53 billion, up from $31.65 billion in February 2025, while services imports rose by 13% to $16.38 billion from $14.51 billion.
While the combined exports (goods and services) rose by 11.04% from $68.56 billion recorded in February 2025 to $76.13 billion in February 2026, imports rose at a faster pace, climbing 21.61% to $80.09 billion compared with $65.84 billion in the same month last year. As a result, the trade balance moved from a surplus of $2.72 billion a year ago to a deficit of $4 billion.
The data indicated that there has been considerable growth in the top three goods exports markets – the US, UAE and China -- for the period of April 2025 to February in 2026 as compared to the same period of the previous year. However, in February exports to the US fell by 13%.
While Russia continued to be the top three exporters to India, imports from the country fell by more than 12% from $58.3 billion in the same period of the previous year to $51.17 billion this year.
Imports from China rose by 30.5% during February, while exports to China rose by 33.4%. The goods Trade deficit with China has touched $112 billion.
The Ministry also cautioned about the export fall in the coming days due to the West Asia crisis.
"This year has been challenging for Indian exports and there are logistical challenges due to the West Asia crisis," said Commerce Secretary Rajesh Agrawal. He assured that both India and countries of the Gulf Cooperation Council (GCC) are well engaged to address the trade challenges. Alongside, the government will also prompt certain measures to respond to the demands that have been raised by the Indian exporters.
Meanwhile, India and Canada will have a virtual meeting in March and will hold the first round of negotiations on their Comprehensive Economic Partnership Agreement (CEPA) in April or May.