India's Goods Trade Performance in February 2025
India experienced a significant decline in goods trade in February 2025, marking the steepest decrease in nearly two years.
Trade Figures
- Exports: Fell by 10.9% to $36.91 billion.
- Imports: Dropped 16.3% to $50.96 billion.
- Trade Deficit: Reduced to $14 billion, the smallest in over 42 months.
Key Factors and Concerns
- The trade deficit reduction was partly due to a high base effect, as last February's figures were inflated due to a leap year.
- American importers are hesitating on orders due to anticipated reciprocal tariffs from the U.S., effective April 2.
U.S.-India Trade Relations
The U.S. is India's second-largest trading partner, with bilateral trade at $118.3 billion last fiscal year. India also enjoys a trade surplus with the U.S.
- President Trump's tariff announcement affects trade dynamics.
- Efforts to continue free trade agreement (BTA) negotiations are ongoing but face challenges.
Import Dynamics
- Gold Imports: Plummeted by 62% due to high domestic prices (₹87,886 per 10 grams).
- Oil Imports: Decreased by nearly 30% as India diversified its supply in response to U.S. sanctions on Russian oil.
Strategic Considerations
India is advised to diversify its trade partners to reduce dependence on the U.S. Potential markets for expansion include China and the U.K.
- China: Longstanding contributor to India's trade deficit.
- U.K.: Presents opportunities through free trade agreement talks to balance trade in India's favor.