India exports rise 18% in May as higher oil imports widen trade deficit

India’s exports rose 18 per cent in May to USD 45.2 billion. This was the highest level in six months. The trade deficit still widened to USD 28.21 billion due to higher imports. Petroleum imports increased as crude prices stayed near USD 100 per barrel. Imports rose 10 per cent to USD 73.41 billion, a three-month high.

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The deficit eased slightly from USD 28.38 billion in April. It remained much wider than USD 22.56 billion in May last year. Commerce Secretary Rajesh Agrawal said exports stayed strong despite global risks. "The May export numbers are one of the highest,\" Agrawal said. Agrawal added that the trend points to a good export year.

India exports growth and May trade deficit

Engineering goods led merchandise exports in May at USD 12.31 billion. This category grew 24.48 per cent from a year earlier. Petroleum product exports jumped 54.89 per cent to USD 8.42 billion. Electronic goods rose 11.62 per cent to USD 5.09 billion. Pharmaceuticals increased 6.63 per cent to USD 2.62 billion.

Several labour-intensive sectors reported a fall in May shipments. These included tea, tobacco, spices, cashew, marine products, leather and textiles. The government data did not provide values for these segments. Still, the declines offset some gains from engineering and petroleum items. Export performance remained mixed across product groups during the month.

India imports and petroleum imports impact on trade deficit

Oil imports climbed 53.8 per cent in May to USD 22.67 billion due to high prices. Crude prices hovered around USD 100 per barrel that month. Electronic imports also rose strongly, up 35.5 per cent to USD 21.31 billion. Higher bills for fuel and electronics added pressure on the merchandise trade gap.

During April-May 2026-27, exports rose 16.09 per cent to USD 88.91 billion. Imports increased 15.14 per cent to USD 145.35 billion in the same period. The trade deficit for the first two months was USD 56.44 billion. Gold imports in April-May surged 60 per cent to USD 9.04 billion.

Oil imports rose 16.5 per cent to USD 41.3 billion during April-May 2026-27. The rise reflected both volumes and higher prices. The import trend remained a key driver of the wider deficit versus last year. Officials tracked these movements alongside export growth. The combined numbers showed strong trade activity but a large gap.

West Asia trade routes and Strait of Hormuz impact on India exports

Exports to West Asia in May were almost near last May’s level, Agrawal said. India’s exports to West Asia were USD 5.30 billion in May. This was slightly lower than USD 5.38 billion in May 2025. India used Oman’s ports Duqm, Sohar and Salalah to push shipments amid regional disruption.

The data came as US President Donald Trump said the US and Iran finalised a deal. The deal aims to end their 107-day war that triggered a global energy crisis. The peace agreement is scheduled to be signed on June 19 in Switzerland. The US-Iran conflict disrupted cargo movement, especially through the Strait of Hormuz.

On the agreement’s effect, Agrawal said, \"We hope its a sustained deal which brings peace in the region...The deal has been in offing for last more than a month, and now that it has come, it should be a deal which can be sustained.\" Agrawal said opening the Strait of Hormuz and peace would help India’s trade.

Services exports and rupee movement linked to crude prices

Government estimates showed services exports at USD 36.76 billion in May. Services imports were USD 19.06 billion in the same month. These figures are separate from merchandise trade data. They indicate a strong surplus in services for May. The estimates added a wider view of India’s external sector performance.

FIEO President S C Ralhan linked the West Asia diplomatic movement to better trade conditions. Ralhan said \"the recent diplomatic breakthrough in West Asia, with regard to the emerging peace framework involving the US, Iran and the broader regional stakeholders, is a positive development for global trade, shipping and supply chains.\" The comment followed news around easing regional tensions.

Ralhan added, \"The reported reopening of the Strait of Hormuz and the de-escalation of geopolitical tensions are expected to improve the movement of goods, stabilise freight and insurance costs, and enhance predictability in international trade flows, but also for our Indian exporters, thereby further providing a boost to our exports in the coming months as GCC is one of our key markets,\" Ralhan said. The statement pointed to benefits for exporters.

The depreciating rupee also supported export realisations, officials and exporters noted. The rupee weakened nearly 5 per cent so far this year. After crude fell below USD 83 per barrel, the rupee strengthened. It closed Monday’s session 60 paise higher at 94.58 against the US dollar. The move followed the West Asia peace deal announcement.

With inputs from PTI