US-bound exports decline 13%, India’s trade deficit with China crosses $100 billion

• India’s exports to the US fell 12.88% in February amid shifting tariff policies.

• A temporary 10% US tariff replaced earlier steep duties, impact awaited in upcoming data.

• Imports from the US rose sharply, widening trade pressures.

• Trade deficit with China crossed $102 billion in April–February.

• Strong export growth to China contrasts with heavy reliance on Chinese imports.

• Overall merchandise trade deficit widened year-on-year.

  
  

India’s trade performance faced fresh headwinds in February, as shipments to the United States contracted sharply amid shifting tariff regimes. Official figures released by the commerce ministry show that exports to the US fell 12.88 per cent year-on-year to $6.88 billion during the month, reflecting the lingering impact of steep American duties on Indian goods.

The decline continues a volatile pattern in recent months. Outbound shipments had already slipped in September, October, December and January, though November briefly bucked the trend with a robust 22.61 per cent surge. Much of the recent strain has been attributed to heavy tariff barriers. Indian products had been subject to sweeping 50 per cent duties before a US Supreme Court ruling overturned the Trump-era tariff structure. In response, US President Donald Trump introduced a uniform 10 per cent tariff on imports from all countries, effective February 24 for a 150-day period. Analysts expect the implications of the reduced levy to become clearer when March trade data is released in mid-May.

While exports to the US softened in February, imports from America moved in the opposite direction, climbing 36.53 per cent to $4.48 billion. Over the April-to-February period of the current fiscal year, India’s exports to the US rose 3.84 per cent to $79.29 billion, whereas imports expanded 15.65 per cent to $48.4 billion, indicating steady bilateral trade growth despite recent monthly fluctuations.

Trade dynamics with China present a different and more structural challenge. India’s exports to China increased 32.37 per cent in February to $1.67 billion, but imports surged far higher in absolute terms, rising 30.49 per cent to $11.95 billion. The imbalance is even more pronounced over the April–February stretch: exports to China grew 37.66 per cent to $17.54 billion, yet imports climbed 15.21 per cent to $119.55 billion. This pushed the trade deficit with China to $102.01 billion during the first 11 months of the fiscal year — already exceeding the roughly $100 billion gap recorded for the entire previous year.

The widening deficit underscores India’s continued reliance on Chinese inputs. Although outbound shipments to China have accelerated — driven by strong growth in telecom instruments and smartphones, oil products, and copper goods — imports remain heavily weighted toward electrical machinery, telecom equipment and electronic components. Many of these items are critical to India’s domestic manufacturing ecosystem, including machinery, chemicals and pharmaceutical ingredients. Efforts to tighten quality standards and curb low-cost imports have had limited impact given this dependence.

Meanwhile, China continues to enforce strict inspection protocols and regulatory standards that restrict Indian goods from entering its market, despite repeated requests from New Delhi for easier access.

Beyond the US and China, trade trends were mixed across other partners in February. Exports registered growth in markets such as Germany, Hong Kong, Italy, Nepal, France, Brazil, Spain, Belgium, Malaysia and Vietnam. However, shipments declined to the UK, the Netherlands, Saudi Arabia, Bangladesh, Singapore, Australia and South Africa.

On the import front, purchases from the UAE, Russia, Germany, Thailand and Qatar eased, while inflows from Saudi Arabia, Iraq, Switzerland, Singapore, Hong Kong, Japan, Korea and Indonesia increased. Notably, imports from Switzerland — largely consisting of gold — jumped nearly seven-fold to $2.71 billion during the month.

Overall, the commerce department estimates India’s merchandise trade deficit at $102 billion for the April–February period, compared with $91.1 billion in the same timeframe last year. After the US, China remains India’s largest source of trade imbalance, with Vietnam ranking third.

As global trade conditions shift and tariff policies evolve, India finds itself navigating both cyclical disruptions and deeper structural dependencies. Whether the recalibrated US tariff regime and ongoing diversification efforts can rebalance trade flows in the months ahead will become clearer as fresh data emerges.