India's Merchandise Exports Rise 18% in May; Trade Deficit Widens to $28.21 Billion

India's merchandise exports grew 18% in May 2026, helped by strong outbound shipments of engineering goods, petroleum products and electronics. Goods exports were estimated at $45.20 billion during the month, up from $38.30 billion a year earlier, according to provisional data from the commerce ministry. The numbers show that Indian exporters held their ground despite three months of disruption in West Asian shipping routes.

However, imports rose faster, climbing 20.6% to $73.41 billion from $60.86 billion a year ago. Because imports grew quicker than exports, the merchandise trade deficit, the gap between what India sells abroad and what it buys, widened to $28.21 billion in May, up from $22.56 billion in the same month last year. The main reason was higher crude oil prices, which pushed up the import bill.

Among exports, engineering goods rose 24.5% to $12.3 billion, petroleum product exports jumped 54.9% to $8.4 billion, and electronic goods exports increased 11.6% to $5.1 billion. On the import side, petroleum, crude and products surged 53.8% to $22.67 billion, electronics rose 35.5% to $12.1 billion, and gold imports climbed 34% to $3.4 billion. Silver imports, by contrast, fell sharply.

Services trade stayed a bright spot. Services exports rose to $36.76 billion in May from $32.46 billion a year earlier, while services imports were $19.06 billion. When goods and services are combined, total exports reached $81.96 billion and total imports $92.47 billion, leaving an overall deficit of $10.51 billion, wider than the $6.79 billion gap a year ago.

The data came out just after the US and Iran agreed to a peace deal expected to ease pressure on the Strait of Hormuz. Lower freight costs and steadier supply chains could help exporters, especially smaller firms that make up nearly half of India's merchandise exports. India has set a long-term target of more than doubling total exports to $2 trillion by FY31, split equally between goods and services.