High-base effect

• India’s goods trade in February saw its steepest decline in nearly two years, with exports falling by 10.9% to $36.91 billion and imports dropping 16.3% to $50.96 billion.
• This resulted in the smallest trade deficit in over three years at $14 billion.
• Experts attribute this narrowing deficit to a high base effect, with exports in February last year standing at $41.4 billion and imports at $60.92 billion.
• American importers are holding back on orders due to the looming reciprocal tariffs set to take effect on April 2, as announced by U.S. President Donald Trump.
• The U.S., India’s second-largest trading partner, is the only country among India’s top five trading partners with which India enjoys a trade surplus.
• Imports also declined sharply, with a 62% plunge in gold imports compared to last February.
• If Washington neutralizes its trade deficit with New Delhi, India could face a 15% widening in its overall trade deficit.
• India must diversify its goods and services trade to reduce its heavy reliance on the U.S.
• Potential markets for India include China and the U.K., with free trade agreement negotiations offering an opportunity to shift this balance in India’s favor.