India May trade gap narrows as exports offset elevated energy import bill

India's merchandise trade deficit narrowed marginally to $28.21 billion in May as high global energy prices boosted petroleum exports, partly offsetting New Delhi's elevated import bill.

Economists had expected the trade deficit to be $28.72 billion in May, according to a Reuters poll, compared with a deficit of $28.38 billion in the previous month.

Merchandise exports rose to $45.2 ​billion in May from $43.56 billion in the previous month, government data showed on Monday, while imports rose to $73.41 billion against a six-month high of $71.94 billion in April.

Meanwhile, the government estimated services exports at $36.76 billion in May, and services imports at $19.06 billion, leading to an estimated services trade surplus of $17.7 billion.

"The strong export performance reflects resilient trade momentum, growing global demand for Indian goods and services, and India’s expanding role in the global economy," the trade ministry said in a statement on X.

India’s total exports, comprising merchandise and services, reached $162.69 billion during April to May 2026-27, registering a robust 14.66% growth over the corresponding period last year, it added.

The numbers come as U.S. and Iranian officials said they had agreed on a framework to end their war, halt the U.S. blockade of Iran and reopen the Strait of Hormuz, a preliminary pact that sent oil prices lower.

The world's third-largest ​oil importer and consumer ships in more than 80% of its crude needs and 60% of ⁠cooking gas, with the Middle East accounting for a large chunk of the supply.

The Strait of Hormuz, a key route for global oil and gas shipments that Iran has effectively shut for months, is expected to reopen on Friday, easing pressure on India's import bill and helping exporters hit by higher freight, insurance and energy costs.

Ashwin Chandran, chairman of the Confederation of Indian Textile Industry, called the U.S.-Iran announcement "a shot in the arm" for India's textile and apparel sector.

He said normalisation in West Asia and the reopening of the Strait of Hormuz would ease cost pressures across supply chains and support India's push to diversify exports and reach $100 billion in textile and apparel shipments by 2030.

(Reporting by Shivangi Acharya; Editing by Nivedita Bhattacharjee)