India’s Merchandise Exports Surge 18% in May Amid Rising Imports

India's merchandise exports showed strong momentum in May, recording an 18% year-on-year increase to reach $45.2 billion. While the export growth is a positive signal for the economy, a significant rise in imports has kept the trade deficit at $28.21 billion for the month.

Robust Growth in Merchandise Exports

According to the latest data from the Commerce Ministry, India’s export sector demonstrated significant resilience in May. The monthly merchandise exports climbed to $45.2 billion, marking an 18% jump compared to the same period last year. This upward trajectory is also reflected in the cumulative figures for the current fiscal year; during the April-May period of 2026-27, total merchandise exports reached $88.91 billion, a 16.09% increase over the corresponding period in the previous year.

Commerce Secretary Rajesh Agrawal expressed optimism regarding the long-term outlook, stating that current trends suggest a very positive year ahead for India's export sector.

Import Surge and the Trade Deficit

Despite the strong performance in outbound trade, India's import bill saw an even sharper increase. Imports rose by 20.62% year-on-year, totaling $73.41 billion in May. This imbalance between high-velocity imports and strong exports resulted in a trade deficit of $28.21 billion for the month.

A major driver behind the rising import costs has been the surge in precious metals. Data reveals that gold imports during the first two months of the current fiscal year skyrocketed by 60%, reaching a total of $9.04 billion. This spike in bullion demand is a key factor contributing to the widening gap between total imports and exports.

Stability in West Asian Trade

A critical area of observation for policymakers has been India’s trade relationship with West Asia, especially given the ongoing geopolitical volatility in the region. However, trade figures suggest a level of stability despite these external pressures.

Commerce Secretary Agrawal noted that exports to the Middle East remained largely consistent. In May, India's exports to the Middle East stood at $5.30 billion, a marginal dip from the $5.38 billion recorded in May 2025. This stability in a high-stakes geopolitical zone underscores the resilience of India's established trade corridors.

Key Takeaways