India’s merchandise trade deficit narrowed to $21.88 billion in May 2025, down from $26.42 billion in April and $22.09 billion in May 2024, according to provisional data released by the Commerce Ministry.
Merchandise exports stood at $38.73 billion in May 2025, registering a 2.2 per cent decline from $39.59 billion in May 2024. Imports contracted by 1.76 per cent to $60.61 billion, compared to $61.68 billion year-on-year (y-o-y).
In April, the trade deficit had widened to a five-month high of $26.42 billion, driven by a spike in imports, despite a modest rise in exports.
April–May trade up 5.75 per cent; electronics, pharma lead
The cumulative trade for April–May 2025 grew 5.75 per cent over the same period last year. Non-petroleum merchandise exports rose 7.5 per cent y-o-y in the two-month window.
Electronic goods exports posted strong growth at 54 per cent in May. Other performing sectors included pharmaceuticals, marine products, and textiles. However, exports of petroleum products, gems and jewellery, and cotton yarn saw notable declines.
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Focus on key sectors and strategic markets
Commerce Secretary Sunil Barthwal stated that India would maintain its strategic focus on six sectors that account for 75 per cent of global imports. "In terms of strategy, we are focusing on certain countries which represent more than 65 per cent of the global imports and are also exploring new markets," he said.
Barthwal added that India is performing "much better than the global average" amid challenging global trade conditions and World Trade Organisation (WTO) projections.
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Impact of geopolitics and market volatility
The Commerce Ministry highlighted that volatility in global petroleum prices — exacerbated by recent geopolitical developments — contributed to lower trade values for crude-linked exports and imports.
Imports from Russia, Iraq, and Saudi Arabia declined y-o-y in April–May 2025. Exports to the Netherlands, Singapore, the UK, Saudi Arabia, and Bangladesh also moderated during the same period.
Preferential trade route usage increases
The ministry also reported an uptick in the use of preferential trade agreements. The number of preferential certificates of origin issued rose from 684,000 in FY24 to 720,000 in FY25. For April–May 2025, 132,000 certificates were issued, compared to 120,000 in the same period last year.
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IFreight rates for Russian oil shipments from the Baltic ports to India eased further in the period from late May to early June, thanks to high tanker availability, but the trend may reverse if Europe's proposed lower price cap comes to fruition.
The European Union has put forward a new sanction package against Russia over Ukraine and proposed to lower the Group of Seven nations' price cap on Russian crude oil to $45 a barrel from $60 a barrel.
The G7 countries and the EU, imposed the $60 cap on Russian oil in late 2022, restricting access to Western shipping and insurance services for above-cap purchases in a bid to curb Moscow's revenues.
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However, as the price of Russia's flagship Urals crude has fallen below the cap, Western shipowners have been able to return to its oil market.
Urals crude price estimates in Russia's ports have stabilised below $60 per barrel since early April, allowing more Western shipping companies, primarily Greek, to resume shipping services, increasing tanker availability and putting freight rates under pressure.
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By Wednesday, the cost of Urals oil loaded from the Baltic Sea port of Primorsk was about $54.72 per barrel.
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The cost of shipping Urals oil from the Baltic ports, including Ust-Luga, to India fell to between $5.5 million and $5.7 million from about $6 million per one-way shipment on average in April and May, and about $8 million early in March.
Russian crude shipping rates rose sharply after a new round of U.S. sanctions on Russian energy interests unveiled in January took effect. Russian oil sellers were forced to look for new tankers to replace those hit by sanctions.
Freight rates still remain above levels in January, when the cost of shipping Russian crude from the Baltic ports to India was between $4.7 million and $4.9 million per one-way shipment.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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