By Manoj Kumar and Nikunj Ohri
NEW DELHI (Reuters) -India’s merchandise trade deficit narrowed sharply to $21.88 billion in May, on account of lower imports, government data released on Monday showed.
The trade deficit was lower than the $25 billion expected by economists in a Reuters poll, and below April’s deficit of $26.42 billion.
“Lower imports resulted in trade deficit reducing more than expected. Weakness in exports persists, reflecting uncertain global demand due to tariffs and softer commodity prices,” said Gaura Sen Gupta, chief economist at IDFC First Bank.
“We expect FY26 current account deficit to remain low at 1.5% of GDP,” she added.
Goods exports stood at $38.73 billion in May while imports were $60.61 billion, compared with $38.49 billion of exports and $64.91 billion of imports in April.
Meanwhile, the trade in services showed an estimated surplus of $14.65 billion in May, as services exports rose to an estimated $32.39 billion while imports increased to $17.14 billion, Trade Secretary Sunil Barthwal told reporters.
“Despite the global policy uncertainty regarding trade, we have done extremely well,” Barthwal said, adding that the fall in global crude oil prices had a dampening impact on exports.
Among product categories, exports of electronic goods, including mobile phones, saw the sharpest year-on-year jump of 54% in May, while shipments of chemicals rose by 16% and those of pharmaceuticals grew by 7.38%, the trade secretary said.
India’s exports to the United States expanded in April-May to $17.25 billion, up from $14.17 billion a year earlier, suggesting that the U.S. tariff hikes averaging 10% in early April had a limited impact.
U.S. President Donald Trump’s flip-flop on sweeping import tariffs – along with uncertainty over the 90-day pause on reciprocal duties for major global trading partners, including a 26% tariff for India until July 9 – has unnerved exporters, prompting many to front-load shipments.
(Reporting by Manoj Kumar and Nikunj Ohri; additional reporting by Siddhi Nayak, Editing by Mrigank Dhaniwala)
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