India's May trade deficit narrows to $21.88 bn amid New Delhi's active FTA push

India's merchandise trade deficit in May stood at $21.88 billion, amid the country actively pursuing Free Trade Agreements, the government said on Monday.

The trade gap narrowed from $26.42 billion in April. On a year-on-year basis, the trade deficit was slightly lower compared to $22.09 billion recorded in May 2024.

As per a Reuters poll, economists had expected the May trade deficit to be around $25 billion.


The merchandise exports in May 2025 were down 2.17 per cent, at $38.73 billion, down from $39.59 billion in May 2024. Meanwhile, imports fell 1.7 per cent YoY, at $60.61 billion as against $61.68 billion.

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.

Data further revealed that in the April-May period, exports increased to $77.19 billion, while imports rose to $125.52 billion.

"Despite the global policy uncertainty regarding trade, we have done extremely well," Barthwal said.

He added that the decline in global crude oil prices had weighed on overall exports. Among product categories, exports of electronic goods, including mobile phones, recorded the sharpest year-on-year rise of 54 per cent in May.

Exports of chemicals grew by 16 per cent, while pharmaceuticals rose 7.38 per cent, he said.

India-US trade amid tariff turbulence

The latest trade data also comes amid a trade pact underworks between India and the United States, who are working to resolve the tariff hikes imposed by US President Donald Trump in April this year. Several rounds of negotiations have taken place to address issues related to market access, tariffs, and regulatory barriers.

India's exports to the United States expanded in April-May to $17.25 billion, up from $14.17 billion a year earlier. The growth suggests that the recent U.S. tariff hikes averaging 10 per cent in early April have had limited impact so far.

"India and the U.S. are aiming to sign an interim deal before July 9," said the trade ministry official. "India-U.S. bilateral trade deal talks are progressing, sticking to time line of signing deal by fall 2025."

Exporters remain watchful as uncertainty continues over the 90-day pause on reciprocal duties for major trading partners, including a 26 per cent tariff on Indian goods that remains effective until July 9.