India trade deficit: Feb 2026 gap widens to $27.1bn

What changed in February 2026

India’s merchandise trade deficit widened to $17.10 billion in February 2026, nearly doubling from $14.42 billion a year earlier and coming in slightly below market expectations of $18.0 billion. The widening gap was driven by a sharp rise in imports, while exports were marginally lower year on year. Data cited in the report also shows India’s overall trade balance (goods plus services) moved to a $1.96 billion deficit in February, compared with a $1.72 billion surplus in February 2025.

The combined picture matters because the goods deficit continues to expand at points when commodity-linked imports rise, but services exports remain a significant offset. February’s data again highlighted that pattern.

Merchandise trade: imports up, exports flat to lower

Merchandise imports jumped 24% year on year to $13.71 billion, driven by purchases of gold and silver, while merchandise exports fell 0.8% to $16.61 billion. That arithmetic produced the $17.10 billion goods deficit for the month.

Trading Economics data points to month-on-month easing in the import bill, with imports decreasing to $13.71 billion in February from $11.24 billion in January 2026. Even with that sequential dip, the year-on-year pace remained elevated.

Overall trade balance: services cushion, but not enough

A government estimate dated March 16, 2026 put India’s overall trade deficit at $1.96 billion in February 2026. Total exports were $16.13 billion and total imports were $10.09 billion, implying imports outpaced exports despite year-on-year export growth.

The services segment stayed supportive. Services exports were reported at $19.53 billion, while services imports were $16.38 billion, implying a services trade surplus of $13.15 billion. That surplus helped offset part of the much larger merchandise deficit, leaving the overall balance only modestly negative relative to the goods gap.

Key February 2026 numbers at a glance

Precious metals: a clear driver of the import bill

The report linked the import surge to precious metals. Over April 2025 to January 2026, gold imports by value rose 20.06% to $11.46 billion from $11.19 billion. In the same period, silver import value jumped 128.54% to $1.78 billion from $1.28 billion.

These figures provide context for why monthly merchandise imports can rise sharply even when other categories are stable. They also show how price and volume changes in a few high-value items can materially alter the trade balance.

How February compares with January and the October record

India’s merchandise deficit was even larger in January 2026, when it surged to $14.68 billion, up from $13.43 billion a year earlier and above a Reuters poll expectation of $16 billion. The report also noted that the January gap was the largest since October 2025, when India posted a record monthly merchandise deficit of $11.68 billion.

The long-run series underscores the volatility. Trading Economics data cited an average balance of trade of - $1.19 billion from 1957 to 2026, with an all-time high of $1.71 billion in June 2020 and the record low of - $11.68 billion in October 2025.

Forecasts cited: near-term and 2027 projections

Trading Economics models and analyst expectations cited in the report projected India’s balance of trade at - $17.00 billion by the end of the current quarter, and trending around - $12.00 billion in 2027. On imports, the same source projected imports of $15.00 billion by the end of the quarter and around $14.00 billion in 2027.

These are model-based projections and not official targets, but they frame market expectations around persistent goods-side pressure.

Broader external-sector context: exports momentum and macro signals

Separate context cited in the report included the Economic Survey’s view that India’s total exports of goods and services hit a record $125.3 billion in FY25. The same narrative highlighted that merchandise exports grew 2.4% during April to December 2025, while services exports rose 6.5%, reinforcing the role of services as an external buffer.

The report also cited external-balance indicators from the survey, including a balance of payments deficit of $1.4 billion in H1FY26 versus a surplus of $13.8 billion a year earlier, financed through a drawdown in foreign exchange reserves. It also noted the rupee depreciated about 6.5% between April 1, 2025 and January 22, 2026.

Why the February print matters for markets

A wider merchandise deficit can feed into expectations for the current account deficit, particularly when driven by high-value imports like gold and silver. At the same time, February’s data again showed services exports providing a sizeable offset, which is why the overall deficit was much smaller than the goods gap.

The report also included bank forecasts on the current account. It cited Goldman Sachs projecting the current account deficit at $17 billion for 2026 (about 2.8% of GDP) and MUFG estimating 1.5% of GDP, with the caveat that it could rise if oil prices increase. Goldman Sachs was also cited as revising its 2026 inflation forecast to 4.2% from 3.9%, and forecasting 6.9% real GDP growth for 2026.

Conclusion

February 2026 extended the pattern of a wider goods deficit alongside a strong services cushion, with the merchandise trade deficit at $17.10 billion and the overall trade balance at -$1.96 billion. Imports rose sharply year on year to $13.71 billion, while exports edged down to $16.61 billion, with precious metals highlighted as a key driver.

With Trading Economics projecting the balance of trade around - $17.00 billion by the end of the quarter, the next set of monthly trade releases will be closely tracked for signs of whether the import impulse eases further from January levels.