India's Export Decline: Unpacking the February Trade Balance

India's exports dropped to USD 36.91 billion in February due to fluctuating petroleum prices and global uncertainties. The country's trade deficit narrowed significantly to USD 14.05 billion as imports decreased. Despite this, cumulative merchandise and services exports rose 6.24% in the April-February period of the fiscal year.

India's exports fell for the fourth consecutive month in February, dropping to USD 36.91 billion, which is attributed to volatile petroleum prices and ongoing global uncertainties. However, the country's trade deficit showed improvement, narrowing sharply to USD 14.05 billion, according to data released by the commerce ministry.

Compared to USD 41.41 billion in exports the same month last year, this year's decline is stark. Imports also saw a reduction to USD 50.96 billion from USD 60.92 billion a year ago. A government official highlighted that these figures are preliminary estimates, with the drastic fall in imports possibly linked to the high-base effect in February 2024 and changes in the prices of petroleum and precious metals.

Aditi Nayar, Chief Economist at ICRA Ltd, noted that India's merchandise trade deficit has compressed significantly to USD 14.1 billion in February, the lowest in 42 months, largely due to reduced imports of crude oil, gold, and silver. Meanwhile, cumulative exports of merchandise and services during April-February rose by 6.24%, reaching USD 750.53 billion.