India’s merchandise trade deficit narrowed to $21.88 billion in May 2025, down from $26.42 billion in April, driven by a sharp rise in non-oil exports and the growing impact of Free Trade Agreements (FTAs), according to data released by the Ministry of Commerce and Industry.
Key Highlights: May 2025 Trade Performance
- Exports: $38.73 billion (↓2.2% YoY)
- Imports: $60.61 billion (↓1.7% YoY)
- Trade Deficit: $21.88 billion (↓from $22.09 billion in May 2024)
Despite a marginal year-on-year dip in headline exports, non-petroleum merchandise exports grew 7.5% in the April–May period, showcasing resilience in core sectors amid global volatility.
Electronics and Pharma Lead Export Growth
- Electronic goods surged 54% YoY, led by mobile phones and semiconductors
- Pharmaceuticals and chemicals posted 7.38% and 16% growth respectively
- Textiles and marine products also saw notable gains
FTA Utilization on the Rise
India’s active pursuit of FTAs with the UK, EU, and US is bearing fruit. The number of preferential certificates of origin—required for FTA-based exports—rose from 6.84 lakh in FY24 to 7.2 lakh in FY25. In April–May alone, certificates increased 10% YoY, reflecting deeper integration into global trade networks.
Geopolitical Headwinds and Policy Response
The Ministry cited volatile petroleum prices and geopolitical tensions as key challenges, particularly affecting trade with Russia, Iraq, and Saudi Arabia. In response, India is intensifying engagement with Export Promotion Councils, shipping lines, and insurance firms to resolve bottlenecks and boost competitiveness.
Outlook: Market-Plus-Sector Strategy in Focus
Officials reaffirmed India’s commitment to a “market-plus-sector” approach, targeting six key sectors that account for 75% of global imports, while strengthening trade ties with countries that make up 65% of India’s total imports.
