India’s goods exports in February 2025 fell 10.85 per cent (year-on-year) to $36.91 billion, the fourth consecutive month of decline, in the backdrop of US’ reciprocal tariff threat, volatility in global petroleum prices and sanctions affecting the gems & jewellery sector.
But trade deficit during the month narrowed to $14.05 billion, the lowest in over three years, as imports dipped 16.3 per cent to $50.96 billion pulled down by gold and petroleum, per government data.
“Although FY25 has been a difficult year, we are moving towards achieving $800 billion in combined exports of goods and services,” Commerce Secretary Sunil Barthwal said at a press briefing on Monday.
US tariff threats
An official source said US President Donald Trump’s threat to impose reciprocal tariffs on high-tariff-charging countries like India from April 2 has affected orders.
“Importers from the US are holding back some of their orders because of the April 2 deadline (for reciprocal tariffs). If the voyage takes one and a half months, they will be tariffed by the time the goods land. So without knowing what kind of tariffs that will be imposed, they don’t want to import,” the source said.
Despite the tariff hiccup, US was the top export market for India in February 2025 with shipments increasing 10.37 per cent to $7.91 billion. Exporters say that some of the increase was due to certain consignments getting expedited in anticipation of tariffs and the actual impact will be clear when the reciprocal tariffs get imposed.
India’s non-petroleum exports in February 2025 were at $337.01 billion compared to $316.64 billion in February 2024.
Gems & jewellery is another sector that has taken a hit in exports, falling 20.74 per cent to $2.53 billion in February 2025, because of the effect of sanctions (on Russian diamonds), the Secretary said.
Imports down
Imports of goods in February 2025 suffered a sharper decline than exports with a fall in imports of gold to $2.3 billion and petroleum to $11.8 billion from $2.68 billion and $13.4 billion respectively the previous month.
“While exports have faced challenges, particularly due to the global tariff war, the sharp decline in imports signals a reduction in demand for foreign goods, presenting opportunities for domestic industries to grow,” said FIEO President Ashwani Kumar.
Consequently, trade deficit in the goods sector narrowed significantly to $14.05 billion, compared to $ 19.51 billion in February 2024, which is a promising sign of India’s trade sector beginning to rebalance, he said.
According to Aditi Nayar, Chief Economist at ICRA, the narrowing of trade deficit is largely explained by a compression in imports of crude oil, gold and silver.
“A portion of the YoY decline in merchandise exports can be attributed to the base year effect related to the leap month. The trade deficit was also significantly lower than the average of over $23 billion during the first 10 months of FY2025. Given this print, we now expect the current account to witness a surplus of ~$5 billion in Q4 FY2025, equivalent to ~0.5 per cent of GDP, in the ongoing quarter,” she said.
The post India’s goods exports in Feb fall 10.85% to $36.91 billion; trade deficit shrinks appeared first on India Seatrade News.