Trade deficit narrows in May despite global headwinds

India’s goods trade deficit declined to $21.88 billion last month from $26.42 billion in April, indicating a strong external demand, government data released on Monday showed.

A recent Reuters poll predicted the trade deficit to be around $25 billion in May.

While India’s goods exports dropped by 2.17% to $38.73 billion last month from $39.59 billion a year ago, imports were down 1.7% to $60.61 billion in May from $61.68 billion a year ago.

Services exports, meanwhile, increased to $32.39 billion in May, up by $14.65 billion from last year.

During April–May, India’s exports increased to $77.19 billion from $74.89 billion, while the country’s imports rose to $125.52 billion from $116.16 billion last year.

Trade secretary Sunil Barthwal told the media in Delhi that the country did extremely well on trade despite global policy uncertainty.

The drop in global crude oil prices had weighed on overall exports, data showed.

While exports of electronic goods, including mobile phones, climbed sharply by 54% in May from a year ago, exports of chemicals inched up by 16% and pharmaceuticals exports increased by 7.38% from last year.

The latest trade data has been released against the backdrop of India and the US negotiating a bilateral trade deal.

India’s exports to the US in April–May stood at $17.25 billion, up from $14.17 billion a year ago, signaling that US tariffs averaging at 10% in early April had limited impact on bilateral trade.