Goods Trade Deficit Widens on a Yearly Basis, Narrows Sequentially in Feb

Chennai: India's merchandise trade deficit widened in February 2026 to approximately $27.1 billion, driven by a 24 per cent y-o-y surge in imports, especially energy, gold and silver. However, the deficit narrowed from $34.68 billion in January.

Merchandise exports in February 2026 were almost flat at $ 36.61 billion when compared to $36.91 billion in February 2025. Merchandise imports in February surged 24 per cent to $63.71 billion against $51.33 billion in the same month last year. Thus, the trade deficit widened from to $27.1 billion against $14.42 in the same month last year.

However, the February trade deficit was smaller than $34.68 billion in January. Cumulatively, India’s merchandise trade deficit at $310.6 billion between April and February FY26 is significantly higher than the $261.8 billion during the same period last year.

With the addition of services trade, the overall trade deficit was about $110 billion so far this fiscal, an increase of about $19 billion from the same period last year.

In February, exports to the US were down by 13 per cent, and that to the UAE was marginally down. Imports from UAE was down 9.62 per cent that from Russia 13. 3 per cent. However, imports from China grew by 30 per cent, and exports were up by 32 per cent.

Engineering goods exports were up 17.6 per cent, electronic goods 15 per cent, gems and jewellery 8.4 per cent and pharmaceuticals 7.7 per cent. In the import basket, gold was up 218 per cent and silver 285 per cent. Electronic goods imports were up 33.43 per cent and crude and petroleum products up by 9.08 per cent, due to lesser imports of discounted Russian crude.

The government has warned that exports will see a downtrend in March, given the disruption caused due to the Iran War.

“The world seems to be changing rapidly. The trade outlook just a month back appeared to be stable, but now it seems clouded. The ongoing conflict is also expected to take a toll on our exports to West Asia and North Africa,” said Pankaj Chadha, chairman, EEPC.