India’s trade deficit narrowed significantly in May 2025, thanks to falling crude oil prices, reduced gold imports, and strong performance in services exports. According to official data, the overall trade deficit, which includes both goods and services, dropped to $6.62 billion. This improvement signals a healthier balance for the Indian economy amid a volatile global environment.
The merchandise trade deficit, which covers only goods, declined to $21.88 billion in May from $26.42 billion in April. This was better than most market estimates and was primarily driven by a sharp reduction in crude oil imports, which fell from $20.72 billion in April to $14.7 billion in May. Gold imports also eased, coming down to $2.5 billion compared to $3.1 billion in the previous month. The government’s ongoing efforts to encourage Free Trade Agreements (FTAs) and its strategic handling of global trade conditions have further supported this trend.
On the export front, India recorded a total of $71.12 billion in exports, registering a 2.8 percent year-on-year growth. This included $38.73 billion in merchandise exports and $32.39 billion in services exports. The services sector once again played a major role in balancing the trade figures, contributing to a surplus of $14.65 billion. Key sectors that led export growth included electronics, which rose 47 percent compared to last year, along with chemicals and pharmaceuticals, which grew 16 percent and 7 percent, respectively.
Overall, the narrowing trade gap in May 2025 reflects India’s improving export strength and efficient import management. While the current trend is encouraging, future trade performance will depend on global oil prices, geopolitical developments, and international trade policies.
