India's exports increased by 4.25% to $26.26 billion (Rs 1.43 lakh crore) for the second straight month in February bringing some cheer to policymakers, though the yawning trade deficit continues to remain a concern.

Though after contracting for eight straight months until December in the current financial year, exports started looking up since January, analysts said it was too early to say that the worst was over. .

Finance minister P Chidambaram, who expressed concern over the rising current account deficit, has already indicated that the government would take measures to boost exports. Several measures are also expected in the forthcoming foreign trade policy.

Engineering goods, rice, textiles, oil meals, pharmaceutical and chemicals were among the sectors which performed well. "Europe is performing better, there is a slight improvement in demand, we certainly expect the trade deficit will narrow as exports are picking up," SR Rao, commerce secretary said on Monday.

"It could be too early to say that exports are picking up, the numbers will look good in the coming months but it would also largely be due to the weak base," DK Joshi, chief economist, Crisil told HT.

Imports also rose 2.6% to $41.1 billion (Rs 2.23 lakh crore) leading to trade deficit of $14.92 billion.