India’s Merchandise Exports Decline 2.17% In May; Trade Deficit Narrows To USD 21.88 Bn

New Delhi, Jun 17 (KNN) India’s merchandise exports contracted by 2.17 percent in May 2025 to USD 38.73 billion, primarily due to a decline in global crude oil prices, according to data released by the Ministry of Commerce. 

Imports also saw a reduction, falling by 1.6 percent to USD 60.61 billion, largely driven by lower inbound shipments of petroleum, coal, and gold.

As a result, the merchandise trade deficit narrowed significantly to USD 21.88 billion in May, down from USD 26.42 billion in April and marginally lower than the USD 22 billion recorded in May 2024.

Despite the overall dip in outbound shipments, exports to the United States rose sharply by 16.9 percent to USD 8.83 billion. 

This surge was attributed to Indian exporters frontloading orders to take advantage of the U.S. administration’s 90-day pause on a 26 percent country-specific reciprocal tariff, which temporarily reduces the applicable tariff on Indian goods to a 10 percent baseline.

Non-petroleum and non-gems and jewellery exports—considered a more stable indicator of export performance—grew by 6.9 percent to USD 30.71 billion. 

Key contributors included electronic goods (up 54.1 percent), organic and inorganic chemicals (16 percent), pharmaceuticals (7.4 percent), and readymade garments (11.35 percent).

Commenting on the trade figures, Commerce Secretary Sunil Barthwal said India has managed to perform well despite global uncertainty and trade policy headwinds. 

“India’s export sector is showing resilience amid ongoing geopolitical tensions and fluctuating demand,” he noted.

Aditi Nayar, Chief Economist, ICRA, remarked that the narrowing of the trade deficit is expected to help contain the current account deficit (CAD) for the first quarter of FY26 to approximately USD 13 billion, or 1.3 percent of GDP. 

She added that if crude oil prices remain around USD 75 per barrel, the full-year CAD could be contained within 1.2 percent–1.3 percent of GDP.

Nayar also highlighted the continued momentum in shipments to the U.S., which have averaged a 28 percent increase over the first four months of calendar year 2025, driven by exporters advancing their consignments in anticipation of the resumption of higher tariffs.

Federation of Indian Export Organisations (FIEO) President S.C. Ralhan said the data reflect the strength of India’s services exports, which have served as a buffer against weak global demand, elevated interest rates, and regional disruptions—particularly in West Asia.

“Exporters are showing remarkable agility in navigating the volatile global landscape,” Ralhan said. “The decline in imports is also indicative of subdued domestic demand and easing global commodity prices.”

Overall, the trade figures for May suggest cautious optimism, as India navigates shifting global dynamics while maintaining a focus on export growth and macroeconomic stability.

(KNN Bureau)