India’s goods trade deficit

• India’s goods trade deficit fell to a 42-month low of $14.05 billion in February 2025, as per the Ministry of Commerce and Industry.
• The decline is attributed to reduced imports of gold, silver, and crude oil, alongside an overall contraction in imports.

Key Factors Behind the Decline

• Reduced Gold & Silver Imports: Fell to $2.7 billion, the lowest since June 2024.
• Lower Crude Oil Imports: Valued at $11.89 billion, marking a 30% YoY reduction due to falling global crude prices and lower domestic demand.
• Overall Import Contraction: Total imports dropped to a 22-month low of $50.9 billion, reflecting a 16.3% decline YoY across key sectors like precious stones and coal.

Implications for the Economy

• Strengthened Trade Position: Narrowing deficit improves India’s trade balance and economic stability.
• Currency Stability: Lower deficit reduces pressure on the Indian Rupee, helping maintain currency stability.

Policy Effectiveness: Indicates success of government policies promoting self-reliance and reducing import dependency.