India’s trade deficit February 2026, exports, imports, Strait of Hormuz crisis, Middle East oil disruption, India’s energy imports
India’s merchandise trade deficit narrowed to $27.1 billion in February, helped by a sharp decline in imports, according to data released by the commerce ministry on Monday. However, economists warn that escalating tensions in the Middle East—particularly around the Strait of Hormuz—could disrupt energy supplies and weigh on trade in the coming months.
The latest figures came in lower than economists’ expectations of $28.8 billion, according to a Reuters poll. In January, India’s trade deficit had stood significantly higher at $34.68 billion.
India’s exports in February edged up slightly to $36.61 billion, compared with $36.56 billion in January, reflecting marginal improvement in global demand for Indian goods.
Meanwhile, imports dropped sharply to $63.71 billion, down from $71.24 billion in the previous month, helping narrow the overall deficit.
Despite the monthly improvement, the broader trade outlook remains uncertain as geopolitical tensions intensify across the Middle East.
A prolonged conflict in the region has raised concerns about a potential disruption in shipping through the Strait of Hormuz, one of the world’s most critical energy chokepoints. Any effective blockade of the narrow waterway could disrupt shipments of crude oil and liquefied natural gas (LNG), triggering ripple effects across global energy markets and trade flows.
The risk is particularly significant for India, which is the world’s third-largest oil consumer and relies heavily on imports to meet domestic demand. The country imports over 80 per cent of its crude oil requirements and nearly 60 per cent of its cooking gas, with a large share coming from the Middle East.
Exporters have also warned that shipments of Indian goods to key regional markets—including Iran, Iraq, Qatar and Saudi Arabia have already been affected by disruptions in maritime routes.
Agricultural exports such as rice are among the products facing delays due to the uncertainty surrounding the key shipping corridor.
Economists say that while February’s data shows some relief on the trade balance, the situation could quickly reverse if energy prices surge or shipping disruptions intensify.
“The geopolitical risks around the Middle East could significantly affect both energy imports and India’s exports to the region,” analysts said, adding that a sustained disruption in the Strait of Hormuz would have far-reaching consequences for India’s trade balance and inflation outlook.
For now, the February trade data reflects a temporary easing in the deficit but the trajectory in the coming months may depend heavily on how the Middle East conflict and global energy markets evolve.
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