Trade Deficit Drops to Lowest in Three and a Half Years Amid Tariff War

Exports Decline for the 14th Consecutive Month, Imports Also at Their Lowest in Nearly Two Years
Amid the global tariff war, India’s trade deficit has narrowed significantly due to a decline in imports. In February 2025, the trade deficit stood at $14.05 billion, the lowest since August 2021. The consistent decline in imports has helped reduce the deficit to its lowest level in three and a half years. Experts suggest that if the current trend continues, the trade deficit could further contract in the coming months.
According to government data, India’s exports have been declining for the past 14 months. In February, exports dropped to $36.91 billion, while imports stood at $50.96 billion. This marks the lowest import level in nearly two years.

Exports Grew by 6.24% in 11 Months
Despite the monthly decline, exports in the first 11 months (April–February) of the fiscal year saw an overall growth of 6.24%, reaching $750.53 billion, compared to $706.43 billion in the same period last year.
Top 5 Export Destinations – Japan Leads
Among India's top five export destinations, Japan recorded the highest growth at 9.1%, followed by the United Kingdom (5.1%), Germany (4.8%), Saudi Arabia (21.6%), and the Netherlands (3.68%).

Decline in Gold and Crude Oil Imports
•    Gold Imports: Fell by 4.6%, reducing the import bill to $2.68 billion compared to $2.81 billion last year.
•    Crude Oil Imports: Declined significantly, bringing down India's overall import expenditure.

Lowest Trade Deficit Since August 2021
The trade deficit in February 2025 was $14.05 billion, the lowest since August 2021, when it was $13.81 billion. This reduction is attributed to lower import costs and declining crude oil prices.
The trade deficit is the difference between a country's exports and imports. The latest figures indicate that while exports remain under pressure, a significant decline in imports has helped balance the deficit. Experts believe that India’s focus on increasing domestic production and reducing dependence on imports has played a key role in this trend.