India's Trade Deficit Reaches US$28.21 Billion In May 2026

India's merchandise trade deficit reached US$28.21 billion in May 2026. This was slightly lower than the figure of US$28.38 billion in April of this year, but still above the median forecast of $27.2 ​‍​‌‍​‍‌billion made earlier by economists.

Merchandise exports rose 18% year-on-year to an all-time monthly high of US$45.2 billion, while imports increased 20.6% to US$73.41 billion. The May export figure is now the highest monthly merchandise export number recorded by India.

What's The Reason For India's Rising Import Bill?

Imports have been growing faster than exports in recent months. During April-May FY27, total imports rose 14.4% year-on-year to US$182.8 billion, with merchandise imports climbing 15.1% to US$145.4 billion.

A major contributor was petroleum. Petroleum imports increased to US$41.3 billion during April-May FY27, compared with US$35.5 billion in the same period last year. Gold imports also remained elevated, reaching US$5.9 billion during the first two months of the financial year.

Can Strong Exports Keep India's Trade Deficit Under Check?

Even after the larger trade deficit, there were several encouraging signs in the export data.

Exports have now grown strongly for two consecutive months after contracting 7.4% in March. Merchandise exports reached US$88.91 billion during April-May FY27, up more than 16% from a year earlier.

India's services sector also continued to provide support. Services exports stood at US$36.76 billion in May, while services imports were US$19.06 billion, resulting in a healthy services trade surplus.

Trade with West Asia also showed signs of stabilisation after earlier disruptions. India's exports to the region recovered to US$5.3 billion in May after falling to US$2.6 billion in March. Imports from West Asia also rebounded to US$10.7 billion in May from US$8.2 billion in March, indicating improving trade flows.

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The record export numbers could be positive for export-oriented sectors such as engineering goods, chemicals, pharmaceuticals, textiles and IT services. However, the continuation of a high trade deficit and rising energy imports are the key macroeconomic risks at the moment, especially if crude oil prices stay elevated.

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