India’s February Trade Deficit Narrows Amid Strong Services Surplus

India’s latest trade data reveals a mixed picture for February, with merchandise exports lagging behind imports but a strong services sector providing crucial support. The figures underscore the importance of services in stabilizing India’s overall trade position amid global uncertainties.  

Merchandise Trade Performance  
According to the Trade Ministry, merchandise imports rose to $63.71 billion, driven by energy and capital goods demand. Exports, however, stood at $36.61 billion, reflecting weaker global demand for certain categories. The resulting deficit of $27.1 billion was narrower than market expectations.  

Services Surplus Cushion  
India’s services sector continued to deliver robust gains, recording a surplus of $23.15 billion. IT services, business outsourcing, and financial services contributed significantly, helping to balance the merchandise gap and sustain overall trade stability.  

Trade Highlights  
Merchandise trade deficit at $27.1 billion in February  
Imports at $63.71 billion, exports at $36.61 billion  
Deficit narrower than Reuters poll estimate of $28.8 billion  
Services surplus at $23.15 billion, led by IT and outsourcing  
Services sector remains key to external trade resilience  

Future Outlook  
Analysts expect India’s services strength to continue cushioning merchandise imbalances in the coming months. However, global demand trends and energy price volatility will remain critical factors influencing trade flows.  

Sources: Reuters, Trade Ministry, Economic Times, Business Standard