India's trade dynamics witnessed a mixed performance in May 2025, with the trade gap narrowing despite a slight dip in exports. According to data released by the Commerce Ministry on Monday, the overall trade deficit decreased to $6.62 billion, a notable improvement compared to $9.35 billion in May 2024. This narrowing of the deficit was largely attributed to a fall in oil prices and a strong performance in the services sector.
Total exports for May 2025 rose to $71.12 billion, marking a 2.77% increase from $69.20 billion in the same month last year. However, this growth was primarily driven by the services sector, which saw exports surge to $32.39 billion, up from $29.61 billion in May 2024. In contrast, merchandise exports experienced a slight decline, falling by 2.2% to $38.73 billion from $39.59 billion in the previous year.
On the import side, India's total goods and services imports in May 2025 stood at $77.75 billion, slightly lower than $78.55 billion a year ago. Merchandise imports also saw a decrease of 1.7% year-on-year, amounting to $60.61 billion as against $61.68 billion. This decline in imports contributed to the narrowing of the trade deficit.
For the first two months of the current financial year (April–May 2025), India's total exports reached approximately $142.43 billion, reflecting a 5.75% year-on-year increase from $134.69 billion. Imports during the same period rose by 6.52% to $159.57 billion from $149.81 billion in April–May 2024. Consequently, the cumulative trade deficit for April–May widened slightly to $17.14 billion from $15.12 billion in the corresponding period of the previous fiscal year.
Commerce Secretary Sunil Barthwal attributed the subdued performance in merchandise exports to the fall in global oil prices. He noted that while total merchandise imports contracted, non-petroleum imports grew by 10% in May 2025. Despite global policy uncertainty regarding trade, India's export performance has remained resilient.
Several sectors have shown positive export growth in May 2025. Exports of electronic goods recorded a sharp year-on-year increase of 54%, while exports of chemicals grew by 16%, and pharmaceuticals rose by 7.38%. Other sectors that experienced positive growth include marine products, tobacco, meat, dairy & poultry products, and organic & inorganic chemicals.
The government has implemented several policy initiatives, including the Production Linked Incentive (PLI) scheme, aimed at boosting manufacturing competitiveness, attracting foreign investment, and integrating India into global supply chains. These efforts are expected to further enhance India's export capabilities in the coming months.
India is actively pursuing Free Trade Agreements (FTAs) with various countries to boost trade and investment. Talks with the European Union and the United States are underway to resolve trade disputes, improve market access, and attract investment, particularly in sectors like electronics, clean energy, and pharmaceuticals. India and the U.S. are aiming to sign an interim deal before July 9, 2025, with the goal of finalizing a comprehensive trade agreement by the fall of 2025.
However, India's trade outlook faces challenges from rising geopolitical tensions in West Asia. Exporters have reported a rise in freight charges, shipping delays, and limited insurance coverage due to these tensions. Despite these challenges, India's export performance has remained strong, driven by the resilience of the services sector and the growth in key product categories such as electronics and pharmaceuticals.
In conclusion, India's trade scenario in May 2025 presents a mixed picture. While merchandise exports experienced a slight dip, the narrowing of the trade deficit and the overall growth in total exports, driven by the services sector, indicate a positive trend. The government's ongoing efforts to promote exports through policy initiatives and trade agreements are expected to further strengthen India's position in the global market.
