India's Trade Deficit Narrows Amid Geopolitical Risks

India's trade deficit decreased to USD 21.5 billion in February from USD 23 billion in January. The reduction is attributed to seasonal adjustments in the Non-Oil-Non-Gold (NONG) sector. Despite improvements, geopolitical concerns, including tariff changes, continue to impact trade. Meanwhile, gold imports surged amid economic uncertainties.

India's trade deficit saw a reduction in February, shrinking to USD 21.5 billion from January's USD 23 billion. A Union Bank of India report attributes this improvement mainly to adjustments within the Non-Oil-Non-Gold segment, aided by quarterly seasonal trends. Nevertheless, the influence of geopolitical risks, particularly around tariffs, still looms over trade dynamics.

The report highlights a significant moderation in the oil trade deficit, bolstered by a decline in worldwide Brent crude oil prices. Brent crude dropped to USD 74.95 per barrel in February, down from USD 78.35 the previous month. Additionally, oil imports from Russia decreased, with February figures showing a 14.5% month-on-month drop, reducing Russia's share in India's oil imports to 30% from the previous year's average of 38%.

February also witnessed a substantial increase in gold imports, climbing to 70 tonnes from January's 40 tonnes. This rise is credited to the marriage season's demand, alongside a strong investment interest in gold driven by uncertainties under the second Trump administration. Going forward, India's trade outlook remains under the shadow of geopolitical tensions, especially concerning trade tariffs.

(With inputs from agencies.)