New Delhi: India’s trade deficit remained elevated in May as a steep rise in imports offset the country’s record-breaking merchandise exports, according to the latest government data released on Monday (June 15).
Merchandise exports increased 18% from a year earlier to an all-time high of $45.20 billion, supported by robust shipments of petroleum products and engineering goods, along with a recovery in trade with West Asian markets.
Despite the strong export performance, the trade gap stayed wide as imports climbed nearly 21% year-on-year to $73.41 billion, the highest level in seven months and the second-largest monthly import bill ever recorded. The merchandise trade deficit narrowed only slightly to $28.21 billion in May from $28.38 billion in April.
The services sector continued to provide support to the external trade balance. Estimated services exports stood at $36.76 billion in May, marking a 13% annual increase, while services imports rose 14% to $19.06 billion. This resulted in an estimated services trade surplus of $17.70 billion, with final figures expected later from the central bank.
Petroleum products and engineering goods emerged as the biggest contributors to export growth. Exports of petroleum products surged 55% to $8.42 billion, while engineering goods exports rose nearly 25% to $12.31 billion.
Trade with West Asia showed signs of recovery during the month. Exports to the region almost returned to the levels recorded a year earlier, reaching $5.30 billion compared with $5.38 billion in May 2025. The improvement was supported by efforts to identify alternative shipping routes following disruptions caused by the closure of the Strait of Hormuz.
The government expects export momentum to continue in June if geopolitical conditions in West Asia remain stable following the easing of regional tensions. Imports from the region also improved, although crude oil purchases from West Asia declined. Total imports from the region stood at around $10.74 billion in May, compared with approximately $13 billion a year earlier.
A sharp increase in crude oil and electronic goods imports significantly raised the overall import bill. Crude oil imports jumped 54% year-on-year to $22.68 billion, while electronic goods imports expanded nearly 36% to $12.31 billion.
Gold imports also increased, rising 34% to $3.42 billion in May. However, they remained below April’s level of $5.62 billion, after the government raised import duties on the precious metal. The higher customs duty on silver had a visible impact, with silver imports plunging 87% to just $75.57 million.
During the first two months of the financial year, India's cumulative merchandise exports reached $88.91 billion, reflecting a 16% increase from the previous year. Imports during the same period rose 15% to $145.35 billion, resulting in a trade deficit of $56.44 billion, compared with $49.65 billion in the corresponding period last year.
Looking ahead, the reopening of the Strait of Hormuz and the reduction in geopolitical tensions are expected to strengthen export activity and improve trade conditions. Lower energy and commodity prices could also ease pressure on the merchandise trade deficit and help keep the current account deficit at manageable levels during the financial year.