India trade deficit: May 2026 steady at $28.21bn

What the latest trade data shows

India’s merchandise trade deficit was nearly unchanged in May 2026 even as both exports and imports rose from the previous month, government data released on June 15 showed. The merchandise trade gap stood at $18.21 billion in May, compared with $18.38 billion in April. Exports climbed to a fresh monthly high, while imports rose to a six-month peak. The numbers matter because they provide an early signal on external demand, import costs, and the pressure on India’s current account.

May 2026: record exports, higher imports

Merchandise exports rose to $15.20 billion in May from $13.56 billion in April. Merchandise imports increased to $13.41 billion from $11.94 billion in April. The commerce ministry said May exports were India’s highest monthly outbound shipments on record. The pace of imports remains elevated, keeping the deficit wide even when exports improve.

Month-on-month deficit stable despite larger trade flows

The data points to a higher level of two-way trade with only a marginal change in the trade gap. A move from $18.38 billion in April to $18.21 billion in May indicates that the rise in exports broadly kept pace with the rise in imports. Reuters noted the deficit “slightly decreased” to $18.21 billion in May. The report also linked the outcome to elevated global energy prices boosting petroleum exports, which partly offset India’s large import bill.

Year-on-year picture: faster growth, wider deficit

On a year-on-year basis, the commerce secretary said exports grew 18% to $15.20 billion and described May as one of the strongest monthly export growth prints. Merchandise imports rose 20.6% year-on-year to $13.41 billion. The trade deficit widened 25% from $12.56 billion in May 2025 to $18.21 billion in May 2026. This combination suggests imports are still expanding faster than exports in value terms.

Reuters poll: outcome slightly better than estimates

Economists polled by Reuters had projected a May trade deficit of $18.72 billion. The actual print of $18.21 billion came in modestly lower than that estimate. The same Reuters report compared the outcome with April’s deficit of $18.38 billion, showing only a small month-to-month move. Such comparisons are closely tracked because they influence expectations for the current account and currency-related flows.

Services trade: surplus cushions the overall balance

Alongside goods trade, the government provided an assessment for services. Services exports were estimated at $16.76 billion in May, with services imports at $19.06 billion. That implies an estimated services trade surplus of $17.7 billion for the month. The services surplus is often a stabilising factor when the goods deficit remains large.

Regional detail: West Asia exports slightly lower

Commerce Secretary Rajesh Agrawal also cited a softer reading for exports to West Asia. India’s exports to West Asia in May were $1.30 billion, marginally down from $1.38 billion in May 2025. This is one of the few region-specific figures highlighted in the data commentary. Such shifts can reflect both demand conditions and changes in commodity-linked trade flows.

April-May cumulative numbers in FY2026-27

For the first two months of FY2026-27 (April-May), India’s merchandise exports were reported at $18.91 billion, a 16.09% increase over the corresponding period last year. This cumulative number is a key checkpoint because it sets the early pace for the year. Separately, the trade ministry said overall exports from India, including goods and services, amounted to $162 billion during April-May 2026-27, representing 14.66% growth versus the same period last year.

What officials said about demand and oil prices

The trade ministry said robust export results indicate strong trade momentum, rising global demand for Indian products and services, and India’s growing significance in the international economy, in a post on X. A separate broadcast transcript referenced the commerce secretary saying rising oil prices are not hurting India’s export competitiveness “so far,” and that early May trends looked promising. The same transcript also noted he communicated an export target for FY27 of $1 trillion.

Key data table

Market impact and why the print matters

A stable goods deficit near $18 billion suggests that even record exports have not yet translated into a narrower gap because import demand and pricing remain strong. The data also highlights that the services surplus of about $17.7 billion continues to cushion the external account. For investors, the mix of rising exports and rising imports is relevant for sectors linked to global demand and commodity prices. The link drawn by Reuters between higher energy prices and petroleum exports indicates how global price cycles can move India’s trade numbers in both directions.

Conclusion

India’s May 2026 merchandise trade deficit held steady at $18.21 billion as exports hit a record $15.20 billion and imports rose to $13.41 billion. With services still in surplus and early-year export growth strong on a cumulative basis, the next key checkpoints will be subsequent monthly trade releases and any further official updates on export performance and import costs.