Geopolitical tensions and policy uncertainty around trade tariffs have impacted India’s merchandise trade in May as both exports and imports recorded a decline. Merchandise exports declined 2% year-on-year in May to $38.73 billion compared to $39.59 billion a year ago. Imports also declined by 1.7% to $60.61 billion during the month from $61.68 billion in the same month a year ago. As a result, the trade deficit declined from $22.09 billion in May 2024 to $21.88 billion in May 2025. Merchandise trade deficit in April this year was $26.4 billion.
The ministry of commerce has attributed the fall in merchandise exports to a decline in exports of petroleum products, which fell 30% year-on-year to $5.6 billion.
“There was a sustained fall in prices in petroleum, which has got a dampening impact on the exports,” said Commerce Secretary Sunil Barthwal, while announcing the May trade data. Non-petroleum exports during the month rose by 5% to $33 billion during the month. Non-petroleum imports grew by 10% to $45.86 billion.
In the April-May 2025 period, exports rose by 3% while imports increased by 8%. Total exports (merchandise and services) during the first two months of the current financial year increased by 5.7% to $142 billion. Exports of electronic goods recorded a healthy 54.1% jump in May.
“Despite the global policy uncertainties regarding trade, and the conflicts which are again going on, we have done extremely well, and our growth in total cumulative exports is about 5.75%. The merchandise exports for April-May have seen positive growth,” said the commerce secretary. Barthwal also highlighted the increase in May non-petroleum exports, which according to him indicate India’s export competitiveness.
Despite uncertainties around the US tariffs, India’s exports to the US continue to grow at a steady pace. In May, exports to the US increased by 17% to $8.8 billion, while in the April-May 2025 period exports to the US grew by 22% to $17 billion. Imports from the US fell by 6% in May but increased by 26% in April-May 2025 period. Exports to China increased by 25% in May, while imports from the country rose by 21.6%.
Gold imports fell by 12% in May to $2.54 billion and declined 3% to $5.65 billion in the April-May period.