Agricultural exports expand across key commodities even as vegetable oil dependence underscores structural vulnerabilities

India’s merchandise trade began FY2026-27 on a strong footing, with exports registering broad-based double-digit growth across manufacturing sectors despite persistent global economic uncertainties. Robust demand for engineering goods, petroleum products, electronics, chemicals and pharmaceuticals helped lift outbound shipments, reinforcing India’s growing competitiveness in global manufacturing. However, rising imports of crude oil, electronic goods, edible oils, fertilisers and precious metals continued to inflate the country’s import bill, highlighting the structural challenges that remain in India’s external sector.

According to the Ministry of Commerce and Industry’s latest Quick Estimates, India’s merchandise exports rose 18 per cent year-on-year to $45.20 billion in May 2026, compared with $38.30 billion in May last year. Merchandise imports increased at a faster pace of 20.62 per cent to $73.41 billion, resulting in a monthly merchandise trade deficit of $28.21 billion. During April-May 2026, exports reached $88.91 billion, registering a 16.09 per cent increase over $76.59 billion during the same period last year, while imports climbed 15.14 per cent to $145.35 billion, taking the cumulative merchandise trade deficit to $56.44 billion.

The latest figures reaffirm that India’s export growth is increasingly being driven by manufacturing rather than traditional commodity sectors. Engineering goods remained the country’s largest export category, with shipments increasing 24.48 per cent to $12.31 billion during May from $9.89 billion a year earlier. During April-May, engineering exports reached $22.66 billion, up 16.78 per cent from $19.40 billion, reflecting sustained global demand for Indian industrial products, machinery, transport equipment and capital goods.

Petroleum products emerged as the biggest growth driver among major export categories. Exports surged 54.74 per cent to $8.42 billion during May compared with $5.44 billion in the previous year. Cumulative exports climbed to $18.17 billion, registering an impressive 66.78 per cent increase over April-May 2025, supported by strong refining margins and healthy overseas demand.

India’s electronics sector continued its remarkable expansion. Electronic goods exports increased 11.62 per cent to $5.08 billion during May, while cumulative exports rose 24.42 per cent to $10.27 billion, underscoring the growing impact of Production-Linked Incentive (PLI) schemes and India’s emergence as a global electronics manufacturing destination. Organic and inorganic chemicals posted another strong performance, rising 12.71 per cent during May to $2.57 billion, while cumulative exports increased 17.94 per cent to $5.02 billion. Drug formulations and biological products remained resilient, growing 6.13 per cent in May to $2.63 billion, with exports during April-May touching $5.29 billion, up 6.63 per cent year-on-year.

Textile exports also maintained positive momentum. Ready-made garments increased 11.17 per cent, while cotton yarn, fabrics and made-ups rose 5.80 per cent. Handicrafts excluding handmade carpets expanded 18.55 per cent, indicating continued recovery across labour-intensive export sectors.

Agricultural exports presented a more mixed picture. Rice, India’s largest agricultural export commodity, recorded a modest 5.38 per cent increase during May to $1.02 billion, although cumulative growth remained almost flat at 0.40 per cent, suggesting stabilisation after previous export policy interventions. Coffee continued to perform strongly, registering 4.37 per cent growth in May and 5.95 per cent during April-May. Oil meal exports rose 24.61 per cent, benefiting from improved international demand for feed ingredients.

Among agri-products, the standout performer was the meat, dairy and poultry products segment, where exports jumped 42.51 per cent during May and 45.04 per cent cumulatively. Marine product exports also grew 17.82 per cent, reflecting resilient global seafood demand. However, several traditional agricultural exports remained under pressure. Tea exports declined 15.07 per cent, tobacco fell 20.94 per cent, fruits and vegetables contracted 7.05 per cent, spices slipped 4.91 per cent, while cashew exports also registered a marginal decline.

On the import side, India’s dependence on energy and industrial raw materials remained clearly visible.

Crude petroleum and petroleum products continued to dominate the import basket, rising 53.80 per cent during May to $22.68 billion, while cumulative imports reached $41.30 billion, up 16.52 per cent over the corresponding period last year. Petroleum alone accounted for nearly one-third of India’s total merchandise imports during the month, underscoring the country’s continuing dependence on imported fossil fuels.

Electronic goods remained the second-largest import category. Imports surged 35.49 per cent during May to $12.32 billion, with cumulative imports touching $25.10 billion, reflecting sustained demand for semiconductors, electronic components and consumer electronics even as domestic manufacturing capacity expands. Machinery imports also remained robust. Electrical and non-electrical machinery imports increased 11.55 per cent to $5.59 billion, while professional instruments rose 14.60 per cent, signalling continued industrial investment.

Among commodity imports, vegetable oils continued to exert considerable pressure on India’s agricultural import bill. Imports rose 32.26 per cent during May to $1.86 billion, while cumulative imports climbed 35.81 per cent to $3.58 billion, reflecting the country’s persistent dependence on imported edible oils. Fertiliser imports also remained elevated, increasing 28.04 per cent during May to $880 million, with cumulative imports rising 15.72 per cent to $1.55 billion, despite ongoing efforts to strengthen domestic fertiliser production. Imports of fruits and vegetables increased 23.23 per cent, while cotton imports rose 43.17 per cent, indicating strong domestic industrial demand.

Industrial raw material imports also witnessed significant growth. Imports of metallic ores and minerals surged 57.49 per cent, sulphur and unroasted iron pyrites increased 55.44 per cent, non-ferrous metals rose 24.56 per cent, while organic and inorganic chemicals expanded 12.15 per cent. Coal imports increased 9.47 per cent, reflecting sustained energy demand from power generation and industry.

Gold imports remained another major contributor to the import bill. Purchases increased 33.97 per cent during May to $3.42 billion, while cumulative imports surged 60.14 per cent to $9.04 billion, supported by strong investment demand and jewellery consumption. In contrast, silver imports fell sharply by 86.65 per cent during the month.

India’s trade geography also continued to evolve.

The United States retained its position as India’s largest export destination. Exports remained broadly stable during May at $8.82 billion, while cumulative exports edged up to $17.29 billion. The United Arab Emirates remained the second-largest export market with shipments worth $5.25 billion during April-May despite an 18.06 per cent decline over last year.

The most striking export growth came from Singapore, where exports surged 68.96 per cent during May and an extraordinary 123.75 per cent during April-May to $5.07 billion, making it India’s fastest-growing major export destination. Exports to China increased 24.80 per cent during May and 25.85 per cent cumulatively to $3.79 billion, while shipments to the United Kingdom rose 12.40 per cent to $2.44 billion.

Several emerging markets posted exceptional growth. Exports to Tanzania nearly tripled during May, increasing 196.89 per cent, with cumulative growth reaching 172.22 per cent. Sri Lanka recorded 183.32 per cent cumulative growth, while exports to South Africa increased 62.24 per cent, Malaysia grew 65.45 per cent, Italy expanded 44.28 per cent, Australia rose 32.36 per cent, Hong Kong increased 61.50 per cent, South Korea climbed 31.78 per cent, Vietnam rose 46.93 per cent, and Spain expanded 43.46 per cent. Bangladesh also recorded a healthy 23.78 per cent increase in cumulative imports from India despite a modest decline during May.

On the import side, China continued to dominate India’s sourcing landscape. Imports increased 23.40 per cent during May to $12.73 billion, while cumulative imports rose 22.15 per cent to $24.70 billion, driven primarily by electronics, machinery and industrial intermediates.

Russia remained India’s second-largest import source. Imports surged 63.46 per cent during May to $9.48 billion, with cumulative imports rising 40.02 per cent to $16.84 billion, reflecting continued purchases of discounted crude oil and energy products.

Imports from the United States increased 54.43 per cent during May and 19.40 per cent cumulatively to $11.15 billion, while imports from the United Arab Emirates declined 22.29 per cent during April-May despite remaining India’s fourth-largest supplier.

Among other major suppliers, imports from Oman recorded the sharpest increase, surging 305.66 per cent during May and 277.63 per cent cumulatively. Imports from Brazil expanded 358.83 per cent during May and 180.35 per cent over April-May, while Nigeria recorded cumulative growth of 81.25 per cent. Malaysia, Thailand, Taiwan, South Korea, Singapore and Vietnam also posted robust double-digit growth, reflecting India’s expanding sourcing network across Asia and resource-rich economies. Conversely, imports from Switzerland declined 20.34 per cent during the two-month period.

The latest trade figures underline a structural transformation underway in India’s external sector. Manufacturing exports—particularly engineering goods, electronics, petroleum products, chemicals and pharmaceuticals—are steadily strengthening India’s export competitiveness and diversifying its export basket. At the same time, persistent dependence on imported crude oil, electronics, edible oils, fertilisers and precious metals continues to keep the import bill elevated. Sustaining export momentum while reducing structural import dependence through domestic manufacturing, energy diversification and agricultural self-reliance will remain central to India’s trade strategy as the country pursues its ambition of becoming a $5 trillion economy and a leading global manufacturing hub.