India's Merchandise Exports Slip Back into the Negative Zone in May

Strategic Insights -

India's merchandise exports fell 2.17% in May to $38.73 billion, reversing a two-month growth trend. The trade deficit narrowed to $21.9 billion. Petroleum and engineering exports declined, while electronics and chemicals exports rose. Services exports grew 9.3%, keeping overall exports up 2.77% at $71.12 billion.

Key Takeaways:

  • Goods exports in May were down 2.17% on year at $38.73 billion, while imports dropped 1.73% to $60.61 billion, resulting in a trade deficit of $21.9 billion.
  • The slump in exports is a cause for concern, given that export figures were subdued in most of recent months, with only two months (October 2024 and April 2025) witnessing decent growth in goods shipments.
  • The 25% additional tariffs on steel and aluminium, auto and auto parts by the US hit engineering exports in May, with shipments contracting 0.82% on year to $9.88 billion.
  • The drop in forex realization from the shipment of petroleum products on account of the subdued crude oil prices and low world trade volumes since the tariff war is behind the export contraction.
  • The engineering sector, which accounts for more than a quarter of goods exports, has been performing consistently well, but saw a decline in May.
  • Excluding petroleum and gems and jewellery exports, May 2025 exports were $30.71 billion compared to $28.73 billion in May 2024.

Statistics:

  • Merchandise exports fell 2.17% in May to $38.73 billion.
  • Trade deficit narrowed to $21.9 billion.
  • Petroleum product exports fell 30.32% to $5.64 billion.
  • Engineering sector exports contracted 0.82% at $9.88 billion.
  • Electronics exports up 54.10% to $4.56 billion.
  • Chemicals exports up 16.0% to $2.68 billion.
  • Drugs and pharma exports up 7.38% to $2.47 billion.
  • Readymade garment exports up 11.3% to $1.51 billion.
  • Gems and jewellery exports contracted 13.9% to $2.37 billion.
  • Services exports up 9.3% to $32.34 billion.

Sources:

  • IE Online Media Services Pvt. Ltd., distributed by Contify.com (no date mentioned)