Merchandise exports stay flat in February, Commerce Secretary warns of dip in March

Indias external trade performance has caught peoples attention in 2026. This happened after official data showed that the countrys merchandise exports did not change much in February. At the time government officials warned that exports could go down in March because of several global and domestic factors. The Commerce Secretary said that there are concerns about demand slowing down tensions between countries and uncertainty in markets.

This issue is important because exports play a role in Indias economic growth, employment, foreign exchange earnings and industrial development.

Merchandise Exports Stay Flat in February; Commerce Secretary Warns of Dip in March

1. Understanding Merchandise Exports

To understand the February data we need to know what merchandise exports are.

Merchandise exports are when one country sells goods to another country. These goods include things that are made, grown or found in the ground. In Indias case the main merchandise export categories are:

* Engineering goods

* Petroleum products

* Gems and jewellery

* Pharmaceuticals

* Electronics

* Textiles and garments

* Agricultural commodities like rice, spices and tea

These exports help India earn money from countries and make its trade position stronger in the global economy.

In addition to merchandise exports India also exports services like IT services, consulting and financial services.. The news report is mainly talking about goods exports.

2. February Export Performance

Exports Did Not Grow Much

According to data Indias merchandise exports in February were about $36.6 billion, which is almost the same as the previous year.

This means exports did not grow much so they are called “flat.”

While exports did not change much imports were much higher.

Exports were $36.61 billion and imports were about $63.71 billion.

As a result the merchandise trade deficit was $27.1 billion in February.

Even though the deficit became smaller compared to January it was still bigger than the deficit in the month last year.

3. Combined Exports of Goods and Services

When we look at both goods and services the numbers look better.

Indias total exports in February were around $76.13 billion, which’s more than 11% compared to February 2025.

However imports grew faster more than 21%, which made the overall trade deficit bigger.

This shows a point:

Indias service exports, especially IT are growing strongly.

Goods exports are struggling to grow.

4. Commerce Secretary’s Warning About March

The Commerce Secretary warned that exports might go down in March. This is because of risks that are affecting global trade.

Some of the concerns are:

* Tensions between countries in the Middle East

* Disruptions in shipping routes

* Weak demand from countries

* Uncertainty in trade policies

For example tensions around the Strait of Hormuz a shipping route for energy are already affecting global trade.

The Middle East is very important for Indias trade.

India exports $100 billion worth of goods to that region every year.

Any disruption in that region could impact exports significantly.

5. Major Factors Behind Flat Export Growth

One of the reasons for slow export growth is weak demand from other countries.

Many developed economies are experiencing economic growth, inflation and high interest rates.

These factors reduce spending and investment leading to demand for imported goods.

As a result countries like India that rely on exports face growth.

Another reason is trade tensions and tariffs.

International trade has been affected by tariff disputes and protectionist policies.

For instance tariffs imposed by the United States affected exports to the American market causing shipments to drop sharply during certain periods.

Since the U.S. Is Indias export destination any policy changes there have a major impact.

Geopolitical conflicts have also become a challenge for global trade.

Examples include conflicts in the Middle East and disruptions to shipping routes.

The Middle East crisis particularly tensions affecting the Strait of Hormuz has created uncertainty in energy and shipping markets.

This affects not oil trade but also shipments of other goods.

Some export sectors have experienced declining shipments.

For example textile exports went down in 2026 due to falling global orders.

Oilmeal exports dropped sharply due to production and weaker demand.

These sector-specific declines contributed to the slowdown.

Another issue is the rise in imports.

Imports increased significantly because of energy demand, gold imports and industrial raw materials.

When imports grow faster than exports the trade deficit increases.

6. Key Export Sectors in India

Despite the slowdown in exports several sectors continue to perform well.

Electronics and smartphones are growing rapidly due to government policies like the Production Linked Incentive scheme.

Smartphone exports alone crossed $21 billion during April-February of FY2025-26.

This growth has been driven by companies shifting manufacturing to India.

Engineering goods remain one of Indias export categories.

These include machinery, auto components and industrial equipment.

Demand from emerging markets has supported this sector.

India is an exporter of generic medicines.

The pharmaceutical sector continues to expand exports to the United States, Europe, Africa, Latin America and other regions.

Agricultural exports like rice, spices and tea remain important for Indias trade balance.

However these exports are vulnerable to weather conditions, food prices and trade restrictions.

7. Government Measures to Support Exports

To address export challenges the government is considering policy measures.

Export incentives like the Remission of Duties and Taxes on Exported Products and the Production Linked Incentive scheme help reduce costs. Encourage manufacturing for export.

India is negotiating trade agreements to expand market access.

Examples include the India-EU Free Trade Agreement and the India-Israel trade negotiations.

The India-EU trade agreement is expected to reduce tariffs on goods and expand trade opportunities.

These agreements could boost exports in the term.

The government is also considering the creation of an economic stabilization fund to support exporters during crises.

This could help businesses manage volatility in markets.

8. Importance of Exports for India’s Economy

Exports play a role in Indias economic development.

Exports contribute significantly to GDP and industrial production.

Millions of jobs depend on export industries like textiles, electronics, gems and jewellery and agriculture.

Export revenues provide currency needed to pay for imports.

Export competition encourages companies to improve productivity and quality.

9. Risks Facing Exports

Several risks could affect export growth in the near future.

A global economic slowdown could reduce demand for imports.

Trade protectionism could lead to tariffs or restrictions that hurt exports.

Supply chain disruptions could delay exports.

Currency volatility could affect export competitiveness.

10. Outlook for March and the Next Financial Year

The Commerce Secretarys warning about a dip in March reflects caution about short-term risks.

However the long-term outlook for Indias exports remains positive due to expanding manufacturing capacity growing electronics exports, new trade agreements and government incentives for exporters.

Indias export strategy is increasingly focused on diversifying markets and products which helps reduce dependence on any country or sector.

Indias merchandise exports remaining flat in February highlights the challenges facing trade in 2026.

Although exports held steady at around $36.6 billion imports were significantly higher resulting in a trade deficit.

At the time geopolitical tensions, weak demand from other countries and sector-specific declines have created uncertainty for exporters.

The Commerce Secretarys warning of a dip, in March reflects these risks.

However strong service exports, growing electronics manufacturing and upcoming trade agreements could help India maintain export momentum in the term.

Overall while short-term fluctuations are expected Indias export sector continues to adapt to challenges and remains an important pillar of the countrys economic growth.