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

India’s merchandise export sector showed significant momentum in May, recording an 18% year-on-year growth. While this surge reflects strengthening global demand for Indian goods, a simultaneous rise in imports has kept the trade deficit at a notable level.

Robust Export Growth Drives Cumulative Gains

According to the latest data from the commerce ministry, India's merchandise exports reached $45.2 billion in May, marking an 18% increase compared to the same month last year. This performance has bolstered the overall trade outlook for the current fiscal year.

When looking at the cumulative performance for the April-May period of the 2026-27 fiscal year, total merchandise exports stood at $88.91 billion. This represents a solid 16.09% growth over the corresponding period in the previous year. Commerce Secretary Rajesh Agrawal expressed optimism regarding these trends, stating that the current trajectory points toward a highly positive year for India’s export sector.

Rising Imports and the Trade Deficit Landscape

Despite the strong performance in outward shipments, the surge in domestic demand and commodity prices has led to a rise in imports. Total imports for May rose by 20.62%, reaching $73.41 billion.

This disparity between high export growth and even higher import growth resulted in a trade deficit of $28.21 billion for the month. A significant driver in this import surge has been the precious metals sector; gold imports alone surged by 60% during the first two months of the current fiscal year, totaling $9.04 billion.

Resilience in West Asian Trade Markets

A key point of interest for analysts has been India's trade relationship with the Middle East, especially given the ongoing geopolitical shifts in the region. Despite these complexities, Commerce Secretary Agrawal noted that exports to West Asia have remained largely stable.

The data reflects this resilience, with exports to the Middle East standing at $5.30 billion in May, a marginal change from the $5.38 billion recorded in May 2025. This stability suggests that Indian trade channels in the West Asian corridor are maintaining their footing despite regional volatility.

Key Takeaways