India’s Exports Drop By 10.9% in February, Which Is A 20-Month Low

The merchandise trade deficit of India was recorded at $14.05 billion in February, marking a three-and-a-half-year low, with a sharp contraction of exports and imports last month.

(Merchandise trade deficit is the difference between imports and exports of goods. When imports are higher than exports, a trade deficit occurs.)

Falling global petroleum prices and US President Donald Trump’s disruptive reciprocal tariff announcements are some factors attributable to the decline, reports say.

The trade deficit – the gap between imports and exports – stood at $19.52 billion in February 2024. As per data from the Commerce Department, released on Monday, outbound shipments from India declined at the fastest rate in 20 months, falling by 10.9% year-on-year to $36.91 billion in February.

Not only are India’s exports hit, but imports also fell by 16.3% to $50.96 billion due to a 29.6% fall in oil imports to $11.9 billion. This resulted in a 62% decline in gold imports, which dropped to $2.3 billion. Overall, these events have contributed to the fastest decline in imports in 20 months and the first drop in 11 months, as per business reports.

China stands in contrast to India. In the same period, China’s exports have gone up by 7.1%, and Vietnam’s outbound shipments increased by 8.4%. These figures highlight India’s export contraction among emerging market economies.

Reciprocal tariffs from the US have challenged India’s exports. The reciprocal tariffs are expected to come into effect on April 2. The US has already levied a 25% duty on steel and aluminum imports.

(When the USA applies high tariffs on imports from India, it obviously creates apprehension among business players about buying from India. This way, India’s exports go down. This is one of the reasons for the export downfall of India, according to experts.)

The tariffs introduced by Trump are also expected to negatively impact India’s pharmaceutical exports. This may result in forcing many smaller players to either incur losses or face pressure to consolidate.