India's trade deficit shrinks to $27.1B in February
What's the story
India's merchandise trade deficit widened to $27.1 billion in February 2026, compared to $14.42 billion in the same month last year. The increase is due to a rise in imports, with exports at $36.61 billion and imports at $63.71 billion, according to data released by the Commerce Ministry today. The widening gap comes amid global trade uncertainties stemming from the tariff tensions and the ongoing conflict involving Iran, which has disrupted energy markets and key shipping routes in West Asia.
Economic forecast
Trade deficit improves from $34.68B in January
Economists had estimated India's February trade deficit at $28.8 billion, according to a Reuters poll. This is an improvement from the $34.68 billion deficit recorded in January. During the April-February 2025-26 period, the country's merchandise exports stood at $402.93 billion, up from $395.66 billion in the same period last year, marking a 1.84% jump according to official data.
Trade challenges
Geopolitical tensions yet to be factored in
The latest merchandise trade data doesn't yet reflect the impact of rising geopolitical tensions in the Gulf. Export momentum remains uneven across sectors, while the higher freight costs, supply disruptions in West Asia, and tariff disputes with key trading partners have started influencing trade flows and exporter sentiment. The impact of these developments might become visible in the data in the coming months.
Export adjustments
Exporters face rising logistics costs
India's exporters are dealing with higher logistics costs and longer shipping routes after Middle East tensions disrupted key maritime corridors. The crisis has pushed the freight and insurance premiums higher, forcing exporters to reroute shipments and absorb additional costs. Exporters in sectors such as apparel and manufacturing have already started adjusting shipment schedules and exploring alternate routes to sustain deliveries.
Oil import risks
Concerns over oil imports from Iran
The ongoing conflict has revived concerns over the Strait of Hormuz, a key route for India's crude imports. Disruption in this corridor could affect nearly half of India's monthly imports, especially oil and energy-linked shipments. Higher oil prices due to the conflict are also adding to India's import bill and might further widen the trade deficit if the trend continues.