India trade deficit at $27.1 bn as imports jump 24%

Overview: February 2026 deficit nearly doubles year-on-year

India’s merchandise trade deficit widened to $17.10 billion in February 2026, nearly doubling from $14.42 billion a year earlier. The print was slightly below market expectations of $18.0 billion, suggesting the gap widened sharply but not as much as consensus estimates had indicated. The trade balance mattered because it captured the combined impact of import demand, export competitiveness, and commodity-linked purchases in a single monthly number. February’s widening came even as the latest reading was smaller than January’s deficit, showing the month-to-month path remained volatile.

What changed: imports up, exports slightly down

The widening was driven primarily by a strong rise in imports alongside a mild decline in exports. Imports jumped 24% year-on-year to $13.71 billion, while exports fell 0.8% to $16.61 billion. The data indicates that import growth outpaced export performance, mechanically expanding the deficit. While the export fall was modest, it was enough to add to the widening when combined with higher inbound shipments. The headline deficit reflects this gap between import and export values for the month.

Key driver: gold and silver purchases lifted imports

The import rise was driven by purchases of gold and silver, according to the provided data summary. Precious-metal buying can move the monthly import bill meaningfully because it is value-dense and sensitive to domestic demand, price levels, and policy signals. In February, the jump in imports alongside the mention of gold and silver points to a commodity-led push rather than a broad-based export surge offsetting it. The result was a deficit close to $17 billion even with exports holding relatively steady.

How February compares with January 2026

February’s deficit followed a much wider gap in January. India’s merchandise trade deficit was reported at $14.68 billion in January 2026, up from $13.43 billion a year earlier and above market expectations of $16 billion. That January gap was described as the largest since October’s record shortfall. Against that backdrop, February’s $17.10 billion suggests the deficit narrowed sequentially from January but remained elevated compared to year-ago levels.

Recent context: December 2025 also showed a sharp gap

December 2025 data in the provided text also highlighted a wide deficit. India’s merchandise trade deficit widened to $15.04 billion in December, with imports rising and exports described as firm in one report. Another data line in the input said December’s merchandise trade balance widened to $15 billion from $10.6 billion in the corresponding period of the previous year, calling it the sharpest gap for that month on record. The December pattern fits with the subsequent January and February readings showing sizeable monthly deficits.

Longer-run context: records and historical average

Trading Economics data in the input states India’s balance of trade averaged -4.19 USD billion from 1957 until 2026. It also recorded an all-time high of 0.71 USD billion in June 2020 and a record low of -41.68 USD billion in October 2025. These reference points show how unusual large monthly gaps can be relative to the long-run average, and they frame why a mid-to-high $10 billion deficit attracts close attention.

Expectations and projections cited in the data

The same source cited expectations for where the trade balance could trend next. India’s balance of trade was expected to be -27.00 USD billion by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. Over the longer term, it projected the balance of trade to trend around -32.00 USD billion in 2027. These numbers are projections and not official outcomes, but they indicate how forecasters were mapping the deficit trajectory based on current conditions.

Key numbers snapshot

Market impact: what the February print signals

A wider trade deficit generally implies the import bill is rising faster than export earnings in that period, and February’s data shows exactly that combination. The import jump to $13.71 billion alongside exports at $16.61 billion led to the $17.10 billion gap. With the input explicitly linking import growth to gold and silver purchases, the data suggests commodity-linked demand played a central role in the month’s imbalance. The fact that the result came in below expectations ($18.0 billion) indicates the deficit widened sharply but did not exceed the market’s central estimate for February.

Analysis: why investors track the deficit month to month

Investors and policy watchers track the trade deficit because it can shape expectations around currency demand for imports, the sustainability of external balances, and the sensitivity of the economy to commodity prices. The input data also shows how quickly the deficit can swing: from $15.04 billion in December 2025 to $14.68 billion in January 2026, then down to $17.10 billion in February 2026. The historical context is equally important because it shows extremes, including the -41.68 USD billion record in October 2025, helping markets interpret whether a monthly print is routine or outsized.

Conclusion: deficit stays elevated after January spike

India’s February 2026 merchandise trade deficit widened to $17.10 billion, driven by a 24% year-on-year rise in imports to $13.71 billion and a 0.8% decline in exports to $16.61 billion. While the February gap was smaller than January’s $14.68 billion, it remained far above the year-ago level of $14.42 billion. The next focus for markets will be how subsequent monthly trade data align with the expectation cited for the quarter-end balance of trade near -27.00 USD billion and the longer-term projection around -32.00 USD billion in 2027.