May-25 trade deficit moderates to $21.88 billion on lower imports

17 Jun 2025 , 11:41 AM

INDIA MAY 2025 TRADE – DATA CHECK

For May 2025, merchandise trade deficit narrowed to $21.88 Billion compared to $26.42 Billion in April 2025. For the month, exports were flat, but imports were sharply lower. This was due to a sharp fall in gold imports and oil imports, largely due to lower crude prices. These two items significantly helped reduce the merchandise trade deficit for May 2025.

Key contributors to exports in May 2025 were Engineering Goods $9.89 Billion (-0.8%), Petroleum Products $5.64 Billion (-30.3%), Electronic Goods $4.57 Billion (+54.1%), Organic & Inorganic Chemicals $2.68 Billion (+16.0%), and Drugs & Pharmaceuticals $2.48 Billion (+7.4%). Key import contributors were crude & petroleum products $14.75 Billion (-26.1%), Electronic Goods $9.09 Billion (+27.2%), Machinery $5.01 Billion (+20.8%), Chemicals $3.43 Billion (+260.1%), and Coal/Coke/Briquettes $2.66 Billion (-19.4%).

Top export destinations for May 2025 were United States $8.83 Billion, United Arab Emirates (UAE) $2.98 Billion, the Netherlands $2.14 Billion, China $1.65 Billion, and Singapore $1.16 Billion. Top import originating nations were China $10.32 Billion, UAE $6.35 Billion, Russia $5.80 Billion, United States $3.63 Billion, and Iraq $2.57 Billion.

HOW MERCHANDISE TRADE EVOLVED IN LAST 1 YEAR

Here is the monthly data of merchandise exports, imports, and trade deficit.

Monthly Data	Exports ($ Billion)	Imports ($ Billion)	Total Trade ($ Billion)	Trade Deficit ($ Billion)
May-24	38.13	61.91	100.04	-23.78
Jun-24	35.20	56.18	91.38	-20.98
Jul-24	33.98	57.48	91.46	-23.50
Aug-24	34.71	64.36	99.07	-29.65
Sep-24	34.58	55.36	89.94	-20.78
Oct-24	39.20	66.34	105.54	-27.14
Nov-24 #	32.03	63.86	95.89	-31.83
Dec-24	38.01	59.95	97.96	-21.94
Jan-25	36.43	59.42	95.85	-22.99
Feb-25	36.91	50.96	87.87	-14.05
Mar-25	41.97	63.51	105.48	-21.54
Apr-25	38.49	64.91	103.40	-26.42
May-25	38.73	60.61	99.34	-21.88

Data Source: DGFT (# – All time high trade deficit)

How do trade figures compare with 12-month averages. Over last 12 months, the average merchandise exports stood at $36.64 Billion, while average merchandise imports stood at $60.35 Billion. For May 2025 exports are higher while imports are at par with 1-year average. The average trade deficit in last 12 months stood at $(23.72) Billion; with the May 2025 trade deficit lower at $(21.88) Billion. In May 2025, total trade at $99.34 Billion was above the previous 12-month average of $96.99 Billion.

TRADE GAP – EXPORT BOOSTERS AND IMPORT TRIMMERS

Here are star export performers in May 2025, on percentage increase in exports yoy. Electronic Goods (+54.1%), Marine Products (+26.8%), Tobacco (+22.7%), Meat / Dairy / Poultry (+16.9%), Chemicals (+16.0%), Mica/Coal/Ores (+11.7%), RMG of Textiles (+11.4%), Spices (+11.2%), and Cereals (+9.7%) were the key export growth drivers in May 2025.  Major import trimmers in May 2025 were Pulses (-51.9%), Transport Equipment (-28.2%), Fertilizers (-26.6%), Petroleum (-26.1%), and Newsprint (-20.6%).

TRADE DATA BREAK-UP FOR MAY 2025

Here is a break up of the merchandise and services export and import data for May 2025, with comparable figures.

Macro Variables (Trade Related)	May-25 ($ Billion)	Apr-25 ($ Billion)	May-24 ($ Billion)	Change YOY (%)
Merchandise Exports	38.73	38.49	39.59	-2.17%
Merchandise Imports	60.61	64.91	61.68	-1.73%
Total Merchandise Trade	99.34	103.40	101.27	-1.91%
Merchandise Trade Deficit	-21.88	-26.42	-22.09	-0.95%
Services Exports	32.39	35.31	29.61	9.39%
Services Imports	17.14	17.54	16.88	1.54%
Total Services Trade	49.53	52.85	46.49	6.54%
Services Trade Surplus	15.25	17.77	12.73	19.80%
Combined Exports	71.12	73.80	69.20	2.77%
Combined  Imports	77.75	82.45	78.56	-1.03%
Overall Trade Volume	148.87	156.25	147.76	0.75%
Overall Trade Deficit	-6.63	-8.65	-9.36	-29.17%

Data Source: DGFT and RBI

What is the big picture? For May 2025 it is a net deficit of $(6.63) Billion; lower than the April 2025 deficit, and much better than the year ago period. The services surplus has offset 69.7% of the merchandise trade deficit. However, the good news is that the overall deficit has come down 29.2% yoy. That is because; while the merchandise trade deficit is almost flat yoy, the services surplus is 19.8% higher yoy.

CUMULATIVE TRADE DATA FOR FY26 (APR-MAY)

Having seen the monthly picture of May 2025, here is a cumulative picture of 2 months of FY25 (April-May).

Macro Variables (Year-to-Date)	FY26 (Apr-May)	FY26 (Apr-25)	FY25 (Apr-May)	Change YOY (%)
Merchandise Exports	77.19	38.49	74.89	3.07%
Merchandise Imports	125.52	64.91	116.16	8.06%
Total Merchandise Trade	202.71	103.40	191.05	6.10%
Merchandise Trade Deficit	-48.33	-26.42	-41.27	17.11%
Services Exports	65.24	35.31	59.79	9.12%
Services Imports	34.05	17.54	33.64	1.22%
Total Services Trade	99.29	52.85	93.43	6.27%
Services Trade Surplus	31.19	17.77	26.15	19.27%
Combined Exports	142.43	73.80	134.68	5.75%
Combined  Imports	159.57	82.45	149.80	6.52%
Overall Trade Volume	302.00	156.25	284.48	6.16%
Overall Trade Deficit	-17.14	-8.65	-15.12	13.36%

Data Source: DGFT and RBI (Trade data in Billion $)

The overall trade deficit, combining merchandise deficit and services surplus, at $(17.14) Billion; is 13.4% higher yoy. This can be attributed to trade uncertainty surrounding Trump’s reciprocal tariff policy, resulting in front-ending of imports. What is essential is that the average monthly overall deficit is contained at under $5 billion, so that India does not have to worry much on the current account deficit front. For now, the focus shifts to the FY25 current account deficit (CAD) to be announced towards the end of the current week.