India's trade deficit narrowed to $27.1 billion in February, down from $34.68 billion in January 2026, as a cooling import bill offset stagnant exports. However, the Iran war looms large, threatening to disrupt India's imports, which account for 85% of its total imports.
The narrowing deficit was driven by a sharp decline in imports, which fell to $63.71 billion in February from $71.24 billion in January. Exports remained largely flat, edging up to $36.61 billion from $36.56 billion in the previous month.
India's services exports stood at $39.53 billion in February, significantly higher than the $31.65 billion recorded a year ago. However, economists warn that the next few months will be a litmus test for India's resilience as the Iran conflict is expected to disrupt trade.
