India’s trade sector recorded a strong performance in May as merchandise exports surged 18% year-on-year to $45.2 billion (₹4.30 lakh crore), according to the latest government data. The sharp rise was largely driven by robust demand for petroleum products and continued strength in global demand for Indian goods.
Petroleum exports emerge as the biggest growth driver
The standout performer was the petroleum sector, where exports jumped 54.89% in May to reach $8.42 billion (₹80,138 crore). This massive increase played a key role in pushing India’s overall export numbers to a new high.
Commerce Secretary Rajesh Agrawal expressed confidence over the trend, saying the momentum in exports indicates strong global demand for Indian products and could make FY2026 a successful year for the country’s export sector.
Imports rise too, widening the trade deficit
While exports grew sharply, imports also increased significantly. India’s total imports in May rose 20.62% to $73.41 billion (₹6.98 lakh crore).
As a result, the country’s trade deficit widened to $28.21 billion (₹2.68 lakh crore) for the month.
Gold imports surge 60% in April-May
One of the biggest contributors to higher imports was gold. Indians continued to buy the precious metal in large quantities, pushing gold imports up by 60% during April and May.
During the two-month period, gold imports totaled $9.04 billion (₹86,039 crore), highlighting strong domestic demand despite elevated prices in the bullion market.
April-May exports show strong start to FY2026
The broader picture for the first two months of the financial year remains encouraging.
Total exports (April-May 2026): $88.91 billion
Growth compared to last year: 16.09%
This strong start suggests that India’s export engine is gaining momentum amid improving global demand and resilient domestic manufacturing.
West Asia exports dip slightly
Despite the overall strong performance, exports to West Asia saw a marginal decline. India exported goods worth $5.30 billion to the region in May, slightly lower than $5.38 billion in May last year.
Three major challenges for India’s export growth
Experts warn that sustaining this growth will require navigating several global headwinds:
1. Rising logistics and freight costs
Ongoing geopolitical tensions and disruptions in global shipping routes are increasing freight costs, making exports more expensive.
2. Currency volatility
Many global currencies are weakening against the US dollar. A stronger dollar can make Indian goods costlier for importing countries, potentially affecting demand.
3. Stricter global environmental rules
Developed economies are introducing tougher sustainability norms and carbon taxes, including the European Union’s Carbon Border Adjustment Mechanism (CBAM). Indian industries such as steel, engineering goods, and textiles may need to upgrade quickly to remain competitive in global markets.
What this means for the Indian economy
The latest export figures are a positive signal for India’s economy, showing strong external demand and resilience in key sectors like petroleum refining and manufacturing. However, the simultaneous rise in imports—especially gold—means policymakers will continue to monitor the trade deficit closely.
Economists believe that if export momentum continues while global conditions stabilize, India could achieve one of its strongest export years on record in FY2026.
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