India’s Trade Deficit Drops to 42-Month Low Amid Decline in Gold, Silver, and Crude Imports

India’s trade deficit dropped to $14.05 billion in February 2025, marking a 42-month low due to a decline in gold, silver, and crude oil imports. This was a significant improvement from January’s $22.9 billion deficit and February 2024’s $19.5 billion. Gold and silver imports fell to $2.7 billion, the lowest since June 2024, while crude and petroleum imports declined to $11.89 billion, the lowest since July 2023. Exports stood at $36.9 billion, while imports hit a 22-month low of $50.9 billion.

Year-on-year, exports fell by 10.84%, partly due to the leap-year base effect, while imports shrank by 16.3%. ICRA projects a $5 billion current account surplus for Q4 FY2025, roughly 0.5% of GDP. Meanwhile, services exports rose to $35.03 billion, with services imports increasing to $16.55 billion. Amid currency depreciation and global trade uncertainties, India is actively engaging with the U.S. to address concerns and boost bilateral trade to $500 billion.

India’s Trade Deficit Drops to 42-Month Low Amid Decline in Gold, Silver, and Crude Imports

India’s trade deficit, which is the gap between the country’s imports and exports, dropped to $14.05 billion in February 2025—the lowest level in 42 months—according to the Ministry of Commerce and Industry. This decline is largely due to a significant reduction in imports of gold, silver, and crude oil. Compared to January 2025, when the trade deficit stood at $22.9 billion, and February 2024, when it was $19.5 billion, this marks a notable improvement.

In February 2025, gold and silver imports fell to $2.7 billion, the lowest since June 2024, when they were $2.5 billion. Similarly, crude oil and petroleum imports declined to $11.89 billion, the lowest since July 2023. These reductions played a crucial role in narrowing the trade deficit.

India’s total exports for February 2025 amounted to $36.9 billion, while imports fell to $50.9 billion, marking a 22-month low. Compared to the same month last year, exports decreased by 10.84%, partly due to the base-year effect influenced by the leap year. Meanwhile, imports recorded a sharper decline of 16.3% year-on-year.

Aditi Nayar, chief economist at ICRA, highlighted that the February 2025 trade deficit was significantly lower than the average monthly deficit of $23 billion recorded during the first 10 months of FY2025. She also projected that India’s current account— which includes trade and financial transactions—could show a $5 billion surplus in the last quarter of FY2025, equivalent to 0.5% of the country’s GDP. This suggests a healthier balance of payments.

Beyond merchandise trade, India’s services sector demonstrated positive growth. Services exports in February 2025 reached $35.03 billion, up from $28.33 billion in the same month the previous year. Services imports also rose slightly, from $15.23 billion in February 2024 to $16.55 billion in February 2025. Growth in the services sector helps offset some of the challenges faced in goods trade.

Despite these improvements, concerns remain. The Indian rupee has been weakening, and global trade uncertainties—particularly due to U.S. trade policies—pose challenges. Trade Secretary Sunil Barthwal stated that India is actively engaging with the U.S. to address trade issues and strengthen economic ties, with a goal of increasing bilateral trade to $500 billion.

In summary, India’s trade deficit fell to a 42-month low in February 2025, driven by a sharp decline in gold, silver, and crude oil imports. Although exports also dropped, the larger decline in imports helped reduce the trade gap. The services sector performed well, with both exports and imports growing. While global uncertainties persist, India is taking steps to resolve trade concerns and strengthen international partnerships, particularly with the U.S. This positive trend in trade could contribute to economic stability and improve the country’s current account balance in the coming months.