India's Trade Deficit Narrows in February Amid Rising Imports and Geopolitical Risks

India's merchandise trade deficit narrowed to $27.1 billion in February 2026 from $34.68 billion in January, as imports fell to $63.71 billion while exports slightly rose to $36.61 billion. Despite a marginal year-on-year decline in merchandise exports, overall exports including services increased by 11%, with imports rising 21%. Geopolitical tensions in West Asia, especially the Iran conflict disrupting key shipping routes like the Strait of Hormuz, have raised logistics costs and pose risks to trade flows. Officials warn March exports may decline due to these challenges, while India’s diversified energy imports and strategic reserves help mitigate immediate supply shocks. Trade deficits with major partners like China remain significant, and tariff changes in the US are expected to affect future export data.