India’s Goods Trade Deficit

As per data from the Ministry of Commerce and Industry, India’s goods trade deficit decreased to a 42-month low of $14.05 billion as imports of gold, silver and crude dipped in February 2025.

Trade Statistics for February 2025

Trade Deficit: The merchandise trade deficit stood at $14.05 billion in February 2025 as compared to $19.5 billion in February 2024.
- The difference between import and export of goods was $22.9 billion in January 2025.
- The trade deficit was also significantly lower than the average of over $23 billion during the first 10 months of FY2025.
Imports: Imports shrank 16.3% in the feb 2025 as against the same period last year to a 22-month low of $50.9 billion.
- Gold and Silver Imports: They were valued at $2.7 billion, which is the lowest since June 2024, when the value was $2.5 billion.
- Crude and Petroleum: Imports were at $11.89 billion which was the lowest since July 2023, when the value was at $11.81 billion.
- Services: India imported services worth $16.55 billion in February 2025.
Exports: It dipped 10.84% in February 2025 on a year-on-year basis, a part of the decline can be attributed to the base year effect related to the leap month.
- Goods: India exported goods worth $36.9 billion in February 2025.
- Service: India exported services worth $35.03 billion higher from $28.33 billion in feb 2024.
Current Account Balance: The current account will witness a surplus of around $5 billion in Q4 of FY2025, equivalent to around 0.5% of the GDP, in the ongoing quarter.

About Balance of Payments (BoP)

The Balance of Payments (BoP) is a systematic record of all economic transactions between a country’s residents and the rest of the world, including imports, exports, capital flows, and transfers, over a specific period.
Components:
- Current Account: It records transactions related to goods, services, income, and unilateral transfers (like gifts or aid).
  - Balance of Trade: It is the largest component of BoP and is the difference between a country’s exports and imports of goods and services over a period of time.
    - It can be either a Trade Surplus (exports exceed imports) or a Trade Deficit (imports exceed exports).
  - Examples: Exports and imports of goods and services, investment income (dividends, interest), and remittances.
- Capital Account: It accounts for all capital transactions between the countries including purchasing and selling assets (non-financial) like land and properties.
  - Loans and Borrowings: It includes all types of loans from the private and public sectors located in foreign countries.
  - Investments: These are funds invested in corporate stocks by non-residents.
  - Foreign exchange reserves: Foreign exchange reserves held by the country’s central bank to monitor and control the exchange rate do impact the capital account.
- Financial Account: It records transactions related to the acquisition and disposal of financial assets and liabilities, such as foreign direct investment, portfolio investment, and other investments.

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