India's Trade Deficit Swells Amid Record Merchandise Exports

Despite record exports, India's trade deficit in May 2026 widened due to a sharper rise in imports. The Ministry of Commerce and Industry reported a trade deficit of USD 10.51 billion, driven by higher domestic demand and commodity prices, despite a peak in merchandise exports and strong services trade.

In May 2026, India witnessed yet another challenging trade landscape as the trade deficit surged despite notable achievements in exports. Recent data from the Ministry of Commerce and Industry highlighted that while combined merchandise and services exports rose sharply to USD 81.96 billion from USD 70.76 billion the previous year, imports surpassed expectations, climbing to USD 92.47 billion from USD 77.55 billion.

The soaring import figures, marked by an increase in domestic demand and elevated global commodity prices, widened the trade deficit to USD 10.51 billion, a significant jump from USD 6.79 billion in May 2025. The breakout star in this extended trade dance was merchandise exports reaching a remarkable USD 45.20 billion, as pinpointed by the ministry's data.

Nonetheless, the tenacity of demand for imports resulted in merchandise imports soaring to USD 73.41 billion, maintaining the goods trade gap as a focal challenge. While the services sector showed resilience with exports rising to USD 36.76 billion, the services surplus was unable to bridge the gap sufficiently. Analysts continue to monitor this deficit trend closely as it reflects the underlying strength and challenges within India's external sector.