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India’s Trade Deficit Hits 3-Year Low at $14.05 Billion in February 2025

Written by: Dev SethiaUpdated on: Mar 18, 2025, 9:17 AM IST
India’s trade deficit fell to a 30-month low of $14.05 billion in February 2025, driven by a sharp drop in imports, leading to a rare overall trade surplus of $4.5 billion.
India’s Trade Deficit Hits 3-Year Low at $14.05 Billion in February 2025
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India’s goods trade deficit fell to a 30-month low of $14.05 billion in February 2025, a sharp decline from $22.9 billion in January, according to data from the Commerce Ministry.

The narrowing trade gap was primarily driven by a steep fall in imports, marking a significant reduction from $19.51 billion in February 2024.

Imports and Exports Witness Decline

India’s total imports dropped 16% year-on-year (YoY) to $50.96 billion in February, compared to $60.92 billion in the same month last year. Meanwhile, exports also fell 11% YoY to $36.91 billion from $41.41 billion in February 2024.

Services trade also saw a decline, with services exports estimated at $35.03 billion in February, down from $38.55 billion in January.

Similarly, services imports stood at $16.55 billion, lower than $18.22 billion recorded in the previous month.”These are quick estimates. We are looking into the details of (the) fall in imports,” said trade official Satya Srinivas.

Drop in Gold and Crude Imports

India’s gold imports slipped to $2.3 billion in February, down from $2.68 billion in January, while crude oil imports fell to $11.8 billion from $13.4 billion in the previous month.

India Posts Rare Overall Trade Surplus

For the first time since May 2021, India recorded an overall trade surplus of $4.5 billion in February when both goods and services were accounted for. This development raises the possibility that the country could register a current account surplus of $20 billion for the January-March quarter.

Consequently, the full-year current account deficit (CAD) could decline to 0.5%-0.7% of GDP, significantly lower than earlier estimates of 1%-1.2%.

Concerns Over Economic Activity

Commerce Ministry officials noted that India’s monthly trade deficit typically fluctuates between $15 billion and $25 billion, sometimes touching $30 billion. However, February’s unusually low deficit of $14 billion has raised concerns about a potential softening in economic activity.

Conclusion

India’s trade deficit narrowing to a 30-month low signals a significant shift driven by declining imports. The rare overall trade surplus of $4.5 billion in February raises optimism for a lower current account deficit. However, concerns persist over slowing economic activity, with officials closely monitoring the impact of declining trade volumes on future growth prospects.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Published on: Mar 18, 2025, 9:17 AM IST

Dev Sethia

Dev is a content writer with over 2 years of experience at Business Today, Times of India, and Financial Express. He has also contributed stories in Hindi for BT Bazaar and Khalsa Bandhan News Paper. A journalism postgraduate from ACJ-Bloomberg, Dev enjoys spending his spare time on the cricket pitch.

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