India’s trade deficit narrowed to $21.88 billion in May 2025, down from $26.42 billion in April, a five-month high, according to data released by the Ministry of Commerce and Industry on Monday. The decline was primarily driven by a drop in imports.
The figure also came in lower than the $25 billion estimate projected by economists in a Reuters poll, offering a positive surprise for markets.
Export and Import Trends
- Merchandise exports fell 2.2% year-on-year to $38.73 billion
- Imports dipped 1.76% to $60.61 billion
On the services front, India posted an estimated surplus of $14.65 billion in May:
- Services exports stood at $32.39 billion
- Services imports rose to $17.14 billion, according to Trade Secretary Sunil Barthwal
Strong Growth in Electronics, Chemicals & Pharma
Despite the overall export dip, some categories posted strong growth:
- Electronic goods, including mobile phones, surged 54% year-on-year
- Chemical exports grew 16%
- Pharmaceutical shipments rose 7.38%
Exports to US Remain Resilient Despite Tariff Hikes
India’s exports to the United States rose to $17.25 billion during April-May 2025, compared to $14.17 billion in the same period last year. This suggests that the 10% average US tariff hikes introduced in April had limited impact on Indian exports so far.
India’s narrowing trade gap and resilience in key export categories signal cautious optimism amid global headwinds.
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