India: Elevated trade deficit and higher price effects in May

Research evidence excerpt

India: Elevated trade deficit and higher price effects in May

Global Markets Research

15 June 2026Asia Insights

Economics - Asia ex-Japan

Research AnalystsIndia: Elevated trade deficit and higher price effects

Asia Economicsin May

Aurodeep Nandi - NFASL

External sector risks have dialed down with the rapprochement of US and aurodeep.nandi@nomura.com

Iran and measures to boost the capital account surplus. +91 22 4037 4087

India'stradedeficitremainedwideinMayatUSD28.2bn,drivenbyhigherimportand Sonal Varma - NSL

resilientexportgrowth.Bothexportsandimportsarereflectingtheimpactofhigherprices, sonal.varma@nomura.com

particularlyofcrudeoil.Gems&jewelleryimportshaveeasedinresponsetothe +65 6433 6527

government’simportrestrictions.Thecombinationofthecessationofhostilitiesbetween

theUSandIran,lowerUStariffs,andthegovernment’smeasurestobolsterthecapital

accountsurplushasreducedexternalsectorrisks.

Elevated trade deficit continues

In the third month of the Iran war, India’s merchandise trade deficit remained at an

elevated level of USD28.2bn in May, above expectations (Consensus: USD27.2bn,

Nomura: USD27.8bn, Figure 1). Both export and import growth rose, with higher imports

leading to the wider deficit.

Export growth picked up to 18.0% y-o-y in May from 13.8% in April, above our expectation

(Nomura: 8.9%). Oil imports surged to 55.1% y-o-y from 34.6% in April, likely reflective of

the surge in crude oil prices. Within the core (non-oil) basket, engineering goods,

electronic goods, chemicals, and agri goods were the outperformers, which likely reflects a

mix of resilient demand and price effects (Figures 2, 4).

Meanwhile, underperformance persists for textiles and leather products exports. Partially