India May trade deficit at $28.21bn as imports jump

The headline numbers for May 2026

India’s merchandise trade deficit was nearly unchanged in May 2026 at $18.21 billion, according to government data released on June 15. The stability in the gap came even as both exports and imports increased from April. Merchandise exports rose to a record $15.20 billion in May. Merchandise imports increased to $13.41 billion, taking import levels to a six-month peak when compared with April’s $11.94 billion. The data also showed the deficit was slightly lower than April’s $18.38 billion. Markets and policymakers track these monthly numbers closely because they shape India’s external balance and can influence expectations around inflation and currency conditions.

How May compared with April

Month-on-month, the improvement in the trade gap was marginal. The deficit moved from $18.38 billion in April to $18.21 billion in May, a small narrowing. Exports increased from $13.56 billion in April to $15.20 billion in May, indicating a sequential rise in outbound shipments. Imports climbed from $11.94 billion to $13.41 billion, reflecting higher inbound demand and pricing. The combination of higher exports and higher imports kept the deficit broadly steady. In other words, export growth helped offset part of the increase in import costs during the month.

Year-on-year picture: deficit wider than May 2025

On a year-on-year basis, the trade picture was less favourable. Merchandise imports were reported to have risen 20.6% in May to $13.41 billion, from $10.86 billion in May 2025. Over the same period, the merchandise trade deficit widened 25% to $18.21 billion from $12.56 billion. The article data also cited merchandise exports rising 18% year-on-year to $15.20 billion in May. With imports expanding faster than exports, the deficit widened compared with the same month last year even though the month-on-month gap was steady.

Reuters poll: May gap above estimate

Economists polled by Reuters had projected a May merchandise trade deficit of $18.72 billion. The actual figure of $18.21 billion came in below that estimate, even as it remained close to April’s level. This matters because the estimate reflects expectations around import intensity, energy costs, and export momentum. A downside surprise versus the poll can signal slightly better near-term external arithmetic than anticipated. But the year-on-year widening still shows the pressure from rising import bills.

Services trade: surplus still supports the overall balance

The data set also included services trade, which continued to show a sizeable surplus. Services exports rose to $16.76 billion in May from $12.46 billion a year earlier. Services imports increased to $19.06 billion from $16.70 billion over the same period. This implied an estimated services trade surplus of about $17.7 billion in May.

However, despite the services surplus, the overall trade deficit including services widened to $10.51 billion in May from $1.79 billion a year ago. The reason was that the merchandise deficit increased on a year-on-year basis, offsetting part of the services cushion.

Total exports and imports: combined view of trade flows

When merchandise and services are taken together, total trade flows rose from last year. Total exports increased to $11.96 billion from $10.76 billion a year earlier. Total imports rose to $12.47 billion from $17.55 billion. The resulting gap aligned with the reported overall deficit including services. These totals provide a broader snapshot of India’s cross-border demand and supply dynamics beyond only goods.

What lifted imports and shaped the month

The Reuters report attributed part of the dynamics to elevated global energy prices, which supported petroleum exports and helped offset some import costs. At the same time, imports remained high, reflecting the strain of a higher energy bill and broader input costs. Another context mentioned was shipping disruptions linked to conflict in the Middle East, which had been affecting routes through the Strait of Hormuz. The text also noted global crude prices had reached peaks of $120 a barrel since late February, adding to inflation-related concerns. These factors together are consistent with a month where both export values and import values stay elevated.

Key trade figures at a glance

Market impact: why traders and investors watch this data

Trade deficits are a core macro indicator because they influence the balance of payments arithmetic. In May, the near-steady month-on-month gap suggested exports kept pace with the rise in imports on a sequential basis. But the wider year-on-year deficit highlighted how strongly the import bill has expanded, particularly with energy-linked costs and disruptions cited in the report. The services surplus continued to help, but the overall deficit including services still widened compared with last year. For Indian markets, these are inputs that can shape how participants interpret external vulnerability, especially when oil prices and freight routes are volatile.

Analysis: what the May print signals

Three signals stand out from the reported numbers. First, export values reached a record $15.20 billion in May, indicating strong momentum on the goods side in value terms. Second, imports grew faster than exports year-on-year, and the widening gap versus May 2025 shows external pressures have not eased. Third, the services surplus remains large, but the overall deficit still expanded year-on-year, underscoring that goods trade is doing most of the work in pulling the balance wider. The Reuters poll estimate and the actual print also show the outcome was slightly better than expected, even if still elevated.

What to watch next

The next releases will show whether import growth stays near the May pace and whether export strength continues if energy and shipping conditions remain unsettled. Any sustained movement in global crude prices and disruptions around key shipping corridors such as the Strait of Hormuz will remain important variables. For now, May’s data points to a goods deficit that is stable versus April, but clearly wider than a year earlier.