India's merchandise exports surged 18% YoY to a 6-month high of $45.2 billion in May, with demand coming from several key industries, including engineering goods, petroleum products, electronics and pharmaceuticals. The robust performance comes despite ongoing geopolitical tensions and uncertainty in global markets, highlighting the resilience of Indian exporters.
Commerce Secretary Rajesh Agrawal said the figures for exports in May were among the best in the past few months and he believed the trend would also continue during the year.
Key Highlights
- India's exports jumped 18% to $45.2 billion in May, the highest since May of last year.
- The trade deficit increased to USD 28.21 billion, fueled by a 53.8% rise in oil imports from a year ago.
Trade Deficit Widens to $28.21 Billion
A robust surge in exports also led to a significant increase in imports, inflating India's trade deficit to $28.21 billion in May. Imports increased 20.6% year-on-year to $73.41 billion, largely due to the increased import of crude oil, petroleum products, gold and electronic goods.
The deficit, however, eased slightly from a record $28.38 billion in April, suggesting that higher exports made up for some of the import costs. The trade deficit was much wider than the $22.56 billion in May of last year.
Engineering Goods, Petroleum and Electronics Lead Export Growth
Engineering goods proved to be the biggest driver of export growth, rising 24.48% to $12.31 billion. Exports of petroleum products rose by 54.89% to $8.42 billion, due to higher oil prices in the world market. Electronics exports climbed 11.62% to $5.09 billion and pharmaceutical exports jumped 6.63% to $2.62 billion.
In contrast, tea, tobacco, spices, cashew, marine products, leather and textiles had negative growth in exports for the month.
Also Read: India Posts $7.1B Current Account Surplus in Q4 FY26 on Strong Exports
Oil and Gold Imports Drive Import Bill
The price of crude oil during May remained close to $100 per barrel, increasing the oil import bill in India. Petroleum imports increased by almost half and electronic goods imports were also high at $22.68 billion. Gold imports also continued to stay high, with the imports during the first two months of FY26-27 increasing by 60% to $9.04 billion.
The rise in energy and precious metals imports led to a significant increase in the trade deficit even though exports were at record levels.
West Asia Peace Deal Could Support Trade Recovery
However, industry participants are welcome to the diplomatic developments in West Asia in recent years that bode well for world trade. Once the Strait of Hormuz is reopened, shipping disruptions, freight costs and supply chain pressures are expected to be reduced as a result of the anticipated framework agreement between the US and Iran.
India's trade with the West Asian region was on the docket, but represented a small $5.3 billion loss in May, with other channels of transportation discussing alternative ports that bypass the region. Exporters are hopeful that the enhanced security in the region will give outbound shipments an extra dose of confidence in the near future.
Strong Start to FY2026-27
India's merchandise exports grew 16.09% to $88.91 billion and imports grew 15.14% to $145.35 billion in the April-May FY2026-27. The two-month running trade deficit totaled $56.44 billion. At the same time, services exports were estimated at $36.76 billion, which helped to give a decent boost to the external sector of the Indian economy as well.
