India’s merchandise trade deficit moderated to USD 21.9 bn in May-25 from USD 26.4 bn in Apr-25
Download ReportQuantEco Research || May-25 Merchandise Trade - Moderate improvement, but risk ahead
India’s merchandise trade deficit moderated to USD 21.9 bn in May-25 from USD 26.4 bn in Apr-25. This was driven by a sequential decline in imports, while exports posted a modest sequential expansion. From a granular perspective, narrowing of the deficit on account of petroleum products and electronic goods helped in the overall moderation in headline trade deficit. In the first two months of the tariff led disruption to global trade, India has turned out to be a moderate performer, while improving its trade intensity with the US. In the near-term, in addition to the approaching July 9th tariff reset deadline, the escalation of geopolitical risk amidst a flare up in Israel-Iran conflict could impart significant uncertainty. Over the medium-term, shifts in world trade order, with countries scouting for bilateral/regional trade agreements/treaties, would shape the trajectory of India’s merchandise trade. With uncertainty galore, we retain our FY26 current account deficit forecast of 0.8% of GDP (USD 33 bn) for now, although we acknowledge that the Israel-Iran conflict would increase the risk premium for commodities, thereby lending an upside risk to our estimate.