Merchandise trade deficit narrows to $21.88 billion in May, shows data

Merchandise exports stood at $38.73 billion in May 2025, a 2.2 per cent decline from $39.59 billion a year earlier

India’s merchandise trade deficit narrowed to $21.88 billion in May 2025, down from $26.42 billion in April and $22.09 billion in May 2024, according to provisional data released by the Commerce Ministry.

 

Merchandise exports stood at $38.73 billion in May 2025, registering a 2.2 per cent decline from $39.59 billion in May 2024. Imports contracted by 1.76 per cent to $60.61 billion, compared to $61.68 billion year-on-year (y-o-y).

 

In April, the trade deficit had widened to a five-month high of $26.42 billion, driven by a spike in imports, despite a modest rise in exports.

April–May trade up 5.75 per cent; electronics, pharma lead

The cumulative trade for April–May 2025 grew 5.75 per cent over the same period last year. Non-petroleum merchandise exports rose 7.5 per cent y-o-y in the two-month window.

 

Electronic goods exports posted strong growth at 54 per cent in May. Other performing sectors included pharmaceuticals, marine products, and textiles. However, exports of petroleum products, gems and jewellery, and cotton yarn saw notable declines.

Focus on key sectors and strategic markets 

Commerce Secretary Sunil Barthwal stated that India would maintain its strategic focus on six sectors that account for 75 per cent of global imports. "In terms of strategy, we are focusing on certain countries which represent more than 65 per cent of the global imports and are also exploring new markets," he said.

 

Barthwal added that India is performing "much better than the global average" amid challenging global trade conditions and World Trade Organisation (WTO) projections. 

Impact of geopolitics and market volatility

The Commerce Ministry highlighted that volatility in global petroleum prices — exacerbated by recent geopolitical developments — contributed to lower trade values for crude-linked exports and imports.

 

Imports from Russia, Iraq, and Saudi Arabia declined y-o-y in April–May 2025. Exports to the Netherlands, Singapore, the UK, Saudi Arabia, and Bangladesh also moderated during the same period.

Preferential trade route usage increases

The ministry also reported an uptick in the use of preferential trade agreements. The number of preferential certificates of origin issued rose from 684,000 in FY24 to 720,000 in FY25. For April–May 2025, 132,000 certificates were issued, compared to 120,000 in the same period last year.