Indian exports rose for a second straight month in February, helped by stronger European demand, official data showed Monday, narrowing the country's trade deficit to its lowest level in 10 months.
February exports increased by 4.25 percent from the same month a year earlier to $26.26 billion in February while imports rose by 2.6 percent to $41.18 billion.
The trade deficit narrowed to $14.9 billion in February, down sharply from $20.08 billion in January.
"Europe is performing better now. The (export) decline has been arrested, India's commerce secretary S.R. Rao, the top bureaucrat in the trade ministry, told reporters.
Engineering and refined oil exports had improved and there had been a "marginal improvement" in overseas sales of textiles, a key sector, he said. Other sectors which fared well included rice, pharmaceuticals and chemicals.
India's exports turned positive in January, rising by 0.82 percent, after falling for eight months.
"We certainly expect the trade deficit will narrow as exports are picking up," Rao said.
The better trade performance could help ease worries over India's hefty ballooning current account deficit which represents the gap in trade as well as capital flows, analysts said.
Global ratings agencies warned last year that they might downgrade India's credit outlook to negative, saying a slowing economy and weak government finances were putting the country's prized investment-grade rating at risk.
The current account deficit hit a record $22.3 billion, or 5.4 percent of gross domestic product, in the July-September period.
"India's February trade deficit showed a significant improvement," said Goldman Sachs in a note to investors, adding that the data suggests "an improvement in the current account deficit in 2013".