India’s Trade Deficit Narrows to $21.88 Billion in May As Imports Decline

Monday, June 16th: India’s trade deficit significantly narrowed to $21.88 billion in May 2025, a notable improvement from the $26.43 billion recorded in April. This contraction, as per the latest data from the Ministry of Commerce and Industry, signals a positive shift in the country’s external trade dynamics.

The primary driver behind the narrower trade gap was a 1.7% year-on-year decline in imports. This pullback in inbound shipments helped ease the pressure on India’s trade balance, which had seen a sharper widening in the preceding month.

Trade Snapshot: May vs April

• May 2025 Trade Deficit: $21.88 billion
• April 2025 Trade Deficit: $26.43 billion
• Change in Imports (YoY): -1.7%

Merchandise exports in May 2025 totalled $38.73 billion, representing a 2.17% decrease from May 2024. Meanwhile, merchandise imports stood at $60.61 billion. Trade in services also contributed positively, with an estimated surplus of $14.65 billion in May, as services exports rose to an estimated $32.39 billion, while imports increased to $17.74 billion.

Outlook

While this monthly improvement in the trade balance is a positive indicator, the fluctuations underscore the importance of continuous monitoring of external sector trends. Global uncertainties, including shifting commodity prices and evolving import-export dynamics, continue to influence India’s trade outlook.

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