Both exports and imports rise in May

India’s merchandise exports grew at a faster pace in May to $38.1 billion, rising 9.1% on-year versus 1.1% in April. Growth was broad-based, with both oil and non-oil exports lending hand. This appears to be in sync with the World Trade Organization’s latest global trade outlook, which indicated a cyclical recovery in goods trade volume this year. Country-wise data, available for April, suggests an improvement in exports to India’s top export destinations, such as the US, Europe and the UAE.

However, it is also important to note that prices of global commodities, both energy as well as non-energy, are higher on-year and could be partly responsible for the rise in the value of exports in the US dollar terms.

Like exports, merchandise imports grew a healthy 7.7% on-year to $61.2 billion, the highest import value in the past seven months. While the rise in imports was largely due to oil, core imports, i.e., non-oil and non-gold¹ imports, also displayed some improvement. Interestingly, oil imports were up sequentially i.e. on-month as well in May, despite softer crude oil² prices ($82/bbl in May versus $90.1/bbl in April). This implies India’s higher oil imports volumes.

With import growth outpacing the rise in exports, merchandise trade deficit widened to $23.8 billion in May, up from $19.1 billion in the previous month and $22.5 billion in May last year.

Cumulative merchandise exports rose 5.1% to $73.1 billion for the April-May period of fiscal 2025, from $69.6 billion in the year-ago period. Cumulative imports rose at a faster pace of 8.9% to $116.0 billion from $106.5 billion. As a result, trade deficit widened to $42.9 billion from $36.9 billion. With domestic growth expected to moderate this fiscal, trade deficit should be reined in going ahead.

Services exports too improved, rising 17.7% on-year to $30.3 billion in April – the latest month for which actual data is available – although helped by a low base. Likewise, services imports grew 19.1% to $16.6 billion in April. It is, however, noteworthy that sequentially services exports may be facing some headwinds, as they are stuck at ~$30 billion over the past three months. That said, lower imports mean services trade surplus remains robust.

¹ Refers to gems and jewellery
² Brent spot