Key facts
- India's merchandise trade deficit narrowed to $28.21 billion in May.
- Merchandise exports rose to $45.2 billion in May, while imports increased to $73.41 billion.
- Services exports contributed an estimated $17.7 billion surplus in May.
- The U.S.-Iran agreement to reopen the Strait of Hormuz is expected to ease import costs.
- India relies heavily on the Middle East for its energy imports.
- U.S. Trade Representative Jamieson Greer is scheduled to visit India for trade talks on an interim agreement.
India's merchandise trade deficit narrowed marginally to $28.21 billion in May, a slight improvement from $28.38 billion in April. Merchandise exports rose to $45.2 billion in May from $43.56 billion in April, while imports increased to $73.41 billion from $71.94 billion.
Services exports were estimated at $36.76 billion in May, with imports at $19.06 billion, resulting in an estimated services trade surplus of $17.7 billion. The trade ministry highlighted resilient trade momentum and growing global demand for Indian goods and services.
The developments occur amid a preliminary pact between U.S. and Iranian officials to end their conflict and reopen the Strait of Hormuz, a key route for global oil and gas shipments. This agreement sent oil prices lower and is expected to ease pressure on India's import bill, which is heavily reliant on the Middle East for energy. India ships in more than 80% of its crude needs and 60% of cooking gas from the region. The normalization in West Asia is seen as a positive development for India's textile and apparel sector, potentially easing cost pressures across supply chains.
India is seeking a trade deal with the United States that would give its exports preferential tariff access. Talks have been complicated by U.S. investigations into alleged overcapacity in sectors such as textiles and steel. Trade Secretary Rajesh Agrawal stated that U.S. Trade Representative Jamieson Greer is due to visit India from June 23 to 24 for further talks on an interim trade agreement. Discussions will be centered around giving final touches to the interim deal, with New Delhi seeking clear answers on proposed new tariffs under a Section 301 probe while finalizing the pact.