Feb-25 trade deficit at just $14 Billion, amidst fall in imports

18 Mar 2025 , 09:16 AM

INDIA FEBRUARY 2025 TRADE – DATA CHECK

For February 2025, merchandise trade deficit narrowed sharply to $14.05 Billion as merchandise imports fell sharply. This could be partially due to a shorter month and also partially because the import reporting tends to get back-ended to next year. Gold imports eased further to just $2.34 Billion, while crude oil imports were -29.6% lower yoy at $11.89 Billion. Here are the top drivers of the export story for February 2025.

Key contributors to export basket in February, by size, were Engineering Goods $9.08 Billion (-8.6%), Petroleum Products $5.81 Billion (-29.2%), Electronic Goods $3.79 Billion (+26.5%), Gems & Jewellery $2.53 Billion (-20.7%), Drugs & Pharmaceuticals $2.47 Billion (-1.5%), and Organic & Inorganic Chemicals $2.23 Billion (-24.5%). The key import contributors were crude & petroleum products $11.89 Billion (-29.6%), Electronic Goods $7.57 Billion (+9.1%), Machinery $4.32 Billion (+5.3%), Transport Equipment $2.61 Billion (-16.9%), Gold $2.34 Billion (-62.0%), and Coal, Coke, Briquettes $2.06 Billion (-35.6%).

Top export destinations for February 2025 were United States $7.91 Billion, United Arab Emirates $3.28 Billion, the Netherlands $1.93 Billion, China $1.26 Billion, UK $1.17 Billion, and Saudi Arabia $1.06 Billion. What where the big sources of imports of goods. For February 2025, top import originating nations were China $8.72 Billion, United Arab Emirates $5.21 Billion, Russia $3.86 Billion, United States $3.05 Billion, Saudi Arabia $2.16 Billion, Iraq $1.79 Billion, and Singapore $1.65 Billion.

HOW MERCHANDISE TRADE EVOLVED IN LAST 1 YEAR

Here is the monthly data of merchandise exports, imports, and trade deficit.

Monthly Data	Exports ($ Billion)	Imports ($ Billion)	Total Trade ($ Billion)	Trade Deficit ($ Billion)
Feb-24	41.40	60.11	101.51	-18.71
Mar-24	41.68	57.28	98.96	-15.60
Apr-24	34.99	54.09	89.08	-19.10
May-24	38.13	61.91	100.04	-23.78
Jun-24	35.20	56.18	91.38	-20.98
Jul-24	33.98	57.48	91.46	-23.50
Aug-24	34.71	64.36	99.07	-29.65
Sep-24	34.58	55.36	89.94	-20.78
Oct-24	39.20	66.34	105.54	-27.14
Nov-24	32.03	63.86	95.89	-31.83
Dec-24	38.01	59.95	97.96	-21.94
Jan-25	36.43	59.42	95.85	-22.99
Feb-25	36.91	50.96	87.87	-14.05

Data Source: DGFT

How do trade figures compare with 12-month averages. Over last 12 months, the average merchandise exports stood at $36.70 Billion, while average merchandise imports stood at $59.70 Billion. For February 2025 exports are at par with the 1-year average, while imports are sharply lower than the average. The average trade deficit in last 12 months stood at $(23.00) Billion; with the February 2025 trade deficit sharply lower at $14.05 Billion.

TRADE GAP – EXPORT BOOSTERS AND IMPORT TRIMMERS

Here are star export performers in February 2025, on percentage increase in exports yoy. Tobacco (+26.8%), Electronic Goods (+26.5%), Mica/Coal/Ores (+24.3%), Coffee (+22.3%), Rice (+13.2%), Jute (+12.4%), Cereals (+11.7%), Meat/Dairy/Poultry (+6.7%), Carpets (+4.9%), Textiles / RMG (+4.0%), and Marine Products (+3.4%) were the key export growth drivers in February 2025.  Major import trimmers in February 2025 were Silver (-75.0%), Gold (-62.0%), Pearls / precious stones (-41.6%), coal/coke/briquettes (-35.6%), and Petroleum Products (-29.6%).

TRADE DATA BREAK-UP FOR FEBRUARY 2025

Here is a break up of the merchandise and services export and import data for February 2025, with comparable figures.

Macro Variables (Trade Related)	Feb-25 ($ Billion)	Jan-25 ($ Billion)	Feb-24 ($ Billion)	Change YOY (%)
Merchandise Exports	36.91	36.43	41.41	-10.87%
Merchandise Imports	50.96	59.42	60.92	-16.35%
Total Merchandise Trade	87.87	95.85	102.33	-14.13%
Merchandise Trade Deficit	-14.05	-22.99	-19.51	-27.99%
Services Exports	35.03	38.55	28.33	23.65%
Services Imports	16.55	18.22	15.23	8.67%
Total Services Trade	51.58	56.77	43.56	18.41%
Services Trade Surplus	18.48	20.33	13.10	41.07%
Combined Exports	71.94	74.98	69.74	3.15%
Combined  Imports	67.51	77.64	76.15	-11.35%
Overall Trade Volume	139.45	152.62	145.89	-4.41%
Overall Trade Deficit	4.43	-2.66	-6.41	-169.11%

Data Source: DGFT and RBI

What is the big picture? For February 2025, not only has the services trade surplus wiped out the merchandise trade deficit, but has resulted in a net overall trade surplus of $4.43 Billion. That is likely to go a long way in making the current account deficit more palatable in FY25. On  yoy basis; the growth in services trade surplus is 41.1%, while the merchandise trade deficit is down -28.0%. That has made all the difference in February 2025.

CUMULATIVE TRADE DATA FOR FY25 (APR-FEB)

Having seen the monthly picture of February 2025, here is a cumulative picture of the first 11 months of FY25.

Macro Variables (Year-to-Date)	FY25 (Apr-Feb)	FY25 (Apr-Jan)	FY24 (Apr-Feb)	Change YOY (%)
Merchandise Exports	395.63	358.91	395.38	0.06%
Merchandise Imports	656.68	601.90	621.19	5.71%
Total Merchandise Trade	1,052.31	960.81	1,016.57	3.52%
Merchandise Trade Deficit	-261.05	-242.99	-225.81	15.61%
Services Exports	354.90	323.68	311.05	14.10%
Services Imports	183.21	168.17	161.71	13.30%
Total Services Trade	538.11	491.85	472.76	13.82%
Services Trade Surplus	171.69	155.51	149.34	14.97%
Combined Exports	750.53	682.59	706.43	6.24%
Combined  Imports	839.89	770.07	782.90	7.28%
Overall Trade Volume	1,590.42	1,452.66	1,489.33	6.79%
Overall Trade Deficit	-89.36	-87.48	-76.47	16.86%

Data Source: DGFT and RBI (Trade data in Billion $)

The overall trade deficit (combining merchandise deficit and services surplus) at $(89.36) Billion; is 16.9% higher on a yoy basis. This can be attributed to the trade uncertainty surrounding the aggressive reciprocal tariff policy proposed by Donald Trump. That remains a major red-flag and while it has depressed exports, it has reduced the imports too.

PARTING THOUGHTS ON CURRENT ACCOUNT DEFICIT

The current account deficit (CAD) for the first half of FY25 stands at 1.2% of GDP, which is reasonable. There were apprehensions that the CAD may widen in Q3 and Q4, but that looks unlikely now. Even in a worst case scenario, it looks unlikely that the overall CAD for FY25 may exceed 1.5% of GDP. That would be thanks to an import slowdown and robust services exports. For now, we await Q3FY25 CAD data later this month!