Trade deficit narrows in February to lowest in three years

India’s trade deficit, or the gap between exports and imports, narrowed to the lowest in more than three years in February, primarily on softening crude oil prices, government data showed.

The trade deficit stood at $14.05 billion last month, lower than the $23 billion recorded in January.

Goods exports declined 10.9%  in February to $36.91 billion from a year ago, while imports fell 16.3% to $50.96 billion, the data showed.

Services exports in February were reported at $35.03 billion and imports at $16.55 billion against $38.55 billion and $18.22 billion, respectively, in January.

Economists in a Reuters and a Bloomberg poll expected the February trade deficit to ease to about $21.5 billion.

India’ exports face risks from geopolitical tensions and also US President Donald Trump’s rhetoric to impose reciprocal tariffs on the US’s trading partners.

The US has levied a 25% tariff on steel and aluminum imports, adversely hitting Indian exports worth around $7 billion.

Trade minister Piyush Goyal met with his  US Trade Representative, Jamieson Greer, this month over a proposed  free trade deal that both nations seek to seal by fall.

Talks with the US are moving in a “positive direction,” trade secretary Sunil Barthwal said at a media briefing in New Delhi on Monday.

The government is holding consultations with stakeholders and assessing the impact of tariffs on exports, he said.

Delhi is also engaging in talks on bilateral cooperation and FTAs with some countries, Barthwal said.

“We are quite open, engaged and transparent about it,” he said, adding that the “openness will help in growing our trade.”

The narrowing deficit may spell relief for the Indian rupee. A decline in crude prices bodes well as India meets 90% of its oil demand from overseas.

Oil imports fell to $11.8 billion in February from $13.4 billion in January, while gold imports declined to $2.3 billion last month from $2.7 billion in January.