India's May Merchandise Exports Surge 18% to $45.2 Billion

India’s merchandise export sector showed significant momentum in May, recording an 18% year-on-year growth despite a wider trade deficit. While global geopolitical tensions continue to shape trade flows, the latest commerce ministry data suggests a positive trajectory for the country's external sector.

Robust Growth in Merchandise Exports

India’s merchandise exports witnessed a strong performance in May, climbing to $45.2 billion compared to the previous year. This growth is not an isolated monthly spike but part of a broader upward trend; cumulative merchandise exports for the April-May period of the 2026-27 fiscal year reached $88.91 billion. This represents a healthy 16.09% increase over the corresponding period last year.

Commerce Secretary Rajesh Agrawal expressed optimism regarding these figures, noting that current market trends point toward a very positive year for India's export performance.

Rising Imports and the Trade Deficit Challenge

While the export numbers are encouraging, the surge in imports has kept the trade deficit under pressure. Total imports rose by 20.62% in May, reaching $73.41 billion. This mismatch between the value of goods sent out and goods brought in resulted in a trade deficit of $28.21 billion for the month.

A significant driver behind the rising import bill is the surging demand for precious metals. Data reveals that gold imports during the first two months of the current fiscal year have surged by 60%, totaling $9.04 billion. This sharp spike in gold inflows is a key factor contributing to the widening gap between imports and exports.

Stability Amid Geopolitical Volatility

One of the most notable aspects of the May trade data is the resilience of India's trade relations with West Asia. Despite ongoing geopolitical developments and instability in the region, India's exports to the Middle East remained remarkably stable.

According to Commerce Secretary Agrawal, exports to the Middle East stood at $5.30 billion in May, showing only a marginal dip from the $5.38 billion recorded in May 2025. This stability suggests that India has successfully navigated regional complexities to maintain its market share and supply chain continuity in a critical energy and trade corridor.

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