India's Trade Deficit Expands in February as Imports Outpace Exports
India's overall exports, combining both merchandise and services, recorded an 11.04 per cent year-on-year increase in February 2026, reaching USD 76.13 billion, up from USD 68.56 billion in February 2025, according to data released by the Commerce Ministry. This growth highlights a positive trend in the country's export performance, driven by robust services exports.
Imports Surge at a Faster Rate, Widening Trade Gap
However, overall imports during the same month grew at a significantly faster pace of 21.61 per cent, rising to USD 80.09 billion from USD 65.84 billion in February 2025. This surge in imports has led to a widening of India's overall trade deficit, which includes both merchandise and services, to USD 3.96 billion in February 2026. In contrast, the country had a trade surplus of USD 2.72 billion in the corresponding month last year, indicating a notable shift in trade dynamics.
Merchandise and Services Trade Breakdown
The data reveals a mixed performance across sectors. Merchandise exports saw a marginal decline, dropping to USD 36.61 billion from USD 36.91 billion in February 2025. On the other hand, merchandise imports increased substantially from USD 51.33 billion to USD 63.71 billion, contributing significantly to the overall trade deficit.
In the services sector, exports showed strong growth, rising to USD 39.53 billion from USD 31.65 billion, while services imports also increased to USD 16.38 billion from USD 14.51 billion. This underscores the critical role of services in bolstering India's export figures, even as merchandise trade faces challenges.
Fiscal Year Performance and Historical Context
For the fiscal year spanning April to February, the cumulative value of overall exports is estimated at USD 790.86 billion, compared to USD 747.58 billion in the same period during the previous financial year. This represents an estimated growth of 5.8 per cent, with an increase of approximately USD 42-43 billion.
India's total exports had previously reached an all-time high of USD 824.9 billion in the financial year 2024-25, marking a yearly growth of 6.01 per cent over USD 778.1 billion in 2023-24. This milestone exceeded initial expectations of USD 800 billion, setting a new annual record and highlighting the country's export resilience in recent years.
The widening trade deficit in February 2026, despite export growth, points to underlying economic factors such as increased import demand, possibly driven by domestic consumption and industrial needs. Analysts are closely monitoring these trends to assess their impact on India's trade balance and overall economic health in the coming months.
