Context : Trade Deficit Decline:
- India’s goods trade deficit fell to $14.05 billion in February 2025, marking a 42-month low.
- The trade deficit was $22.9 billion in January 2025 and $19.5 billion in February 2024.
Relevance : GS 3(Economy)
- Import Trends:
- Gold & Silver Imports:
- Dropped to $2.7 billion, the lowest since June 2024 ($2.5 billion).
- Gold & Silver Imports:
- Crude & Petroleum Imports:Declined to $11.89 billion, the lowest since July 2023 ($11.81 billion).
- Overall Imports:Fell to $50.9 billion, the lowest in 22 months.YoY contraction: -16.3% compared to February 2024.
- Export Trends:
- Total Exports: $36.9 billion in February 2025.
- YoY Decline: -10.84% compared to February 2024.
- Reason for Decline:
- Base year effect due to leap month, as per ICRA’s Chief Economist Aditi Nayar.
- Macroeconomic Perspective:
- The trade deficit in February 2025 was significantly lower than the FY2025 average (over $23 billion in the first 10 months).
Implications
- Lower gold, silver, and crude imports contributed to reducing the trade deficit.
- Weaker global demand and domestic slowdown might have impacted exports.
- A narrowing trade deficit could ease pressure on India’s current account balance.
