India's Trade Deficit Reaches a 42-Month Low

In a significant economic development, India's trade deficit has narrowed to a 42-month low of $14 billion in February 2025. This improvement is primarily attributed to a slowdown in imports, which totaled $51 billion, according to data released by the commerce ministry.

Exports and Imports Overview

Despite the positive news, exports experienced a downturn, falling to $36.9 billion from $41.4 billion in the same month last year. This decline is partly due to volatility in petroleum prices and global uncertainties. However, over the 11 months of FY25, merchandise and services exports saw a 6.2% increase, reaching $750.5 billion compared to $706.4 billion in the previous year.

Government and Expert Comments

Union commerce secretary Sunil Barthwal expressed optimism about meeting the trade target of crossing $800 billion, citing non-petroleum products as a key strength of Indian trade. ICRA chief economist Aditi Nayar highlighted the compression in imports of oil, gold, and silver as a significant factor behind the reduced trade deficit and anticipates a current account surplus in Q4 FY25.