India's trade deficit at USD 28.21 billion in May; relief expected from softer oil prices: Report
New Delhi, June 16
While India's trade deficit widened to USD 28.21 in May 2026, lower crude oil prices and higher duties on gold imports will likely ease pressure on the import bill and trade deficit as per a report by Dolat Capital.
The report noted that India's petroleum imports surged sharply to USD 22.7 billion in May-26 from USD 14.0 billion a year ago, while non-petroleum exports increased to USD 70.7 billion during April-May FY27 from USD 64.0 billion in the corresponding period last year. Non-petroleum, non-gems and jewellery exports also increased to USD 65.9 billion from USD 59.2 billion.
Furthermore, India's non-petroleum imports remained robust at USD 104.1 billion as against USD 90.8 billion a year ago, on demand for electronics, machinery, capital goods and industrial inputs reflecting continued strength in domestic investment activity and consumption.
The report noted, India's "merchandise imports surged to USD 73.41 billion (+20.62% YoY) in May 2026 and cumulatively (Apr-May '26) reached USD 145.35 billion (+15.14% YoY)." On the other hand, "merchandise exports grew to USD 45.20 billion (+18.00% YoY) in May 2026 and cumulatively (Apr-May '26) reached USD 88.91 billion (+16.09% YoY)."
As per Dolat Capital, export growth is becoming more broad-based across products and markets, reducing reliance on a few commodity segments. At the same time, deeper trade ties with Asia, the Middle East, Africa, and other emerging regions point to greater geopolitical diversification, lowering concentration risks and strengthening resilience against regional shocks and supply chain disruptions.
As per the report, "softer crude oil prices amid easing geopolitical tensions in West Asia could lower the oil import bill and help narrow the trade deficit."
Furthermore, petroleum product exports will likely benefit from favorable excise duty structure and strong pent-up demand, while higher duties on gold imports are expected to restrain nonessential imports.
"Together, these factors support a more balanced and resilient external sector outlook, with trade increasingly anchored by manufacturing competitiveness, investment demand and diversified global partnerships," the report said.
— ANI
Reader Comments
The rise in electronics and machinery imports shows our domestic demand is strong. But why can't we make more of these items here? Make in India needs to accelerate. We shouldn't be celebrating higher imports just because consumption is high. 🇮🇳
Interesting that India is diversifying trade partners away from traditional reliance. Geopolitical diversification makes sense given global uncertainties. The Middle East ties remain crucial for oil though. Good to see broad-based export growth.
Higher duty on gold imports is sensible. We're the world's biggest gold consumer, but it's a non-essential import that drains forex. Meanwhile, petroleum exports getting a boost from excise duty structure is smart policy. Hope this balanced approach continues without harming common citizens.
Petroleum imports nearly doubled to $22.7bn—that's a huge jump. While lower crude prices might help, we need to accelerate renewable energy adoption. Every rupee saved on oil imports is a rupee for development. India's solar and wind potential is enormous.
Good news that export growth is broad-based and not just dependent on a few commodities. But I worry about the impact of higher gold duties on small jewellers and consumers. Expecting wedding seasons could get costlier. Still, overall direction seems positive for the economy.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.