India’s merchandise exports rose to a record $45.2 billion in May, up 18% year-on-year, but the headline number masks a more complex picture: the role of commodity price inflation, especially in petroleum products.
Mint explains:
What’s behind the high export numbers?
Export growth, which had slowed to just 0.9% in FY26, rebounded in April and May, averaging 16.1%. The slowdown in FY26 was driven by tariff-related disruptions, while the recent rebound has been largely price-led.
illustrate the distortion. Exports rose 36.8% in April and 54.9% in May, but volumes fell 22.7% year-on-year in April. That divergence points to price-led expansion in value terms. Excluding petroleum products, export growth slows to 9.0% in April and 11.9% in May, still likely supported by firmer global commodity prices.
How may have prices lifted export value?
May data remains limited, but April shows a clear divergence between export volumes and value. Petroleum product exports rose 36.8% in dollar terms, even as volumes fell 22.7% year-on-year. The combination points to a price-led increase in export value in April. A similar pattern may have persisted in May, with detailed data due later this month.
Beyond crude oil, commodity prices rose broadly across categories. The World Bank’s commodity price index suggests gains of 40-60% during April–May across energy, fertilizers and metals.
have also climbed, driven by higher fuel prices and war-risk premiums, adding another layer of inflation to export values.
Have engineering and electronic goods performed well?
Within the non-oil segment, exports in May were led by engineering and electronics goods, which rose 24.5% and 11.6%, respectively. Electronics growth lagged the 23.1% expansion seen in FY26, but engineering goods posted their strongest increase in six months. Given the segment’s heavy exposure to metals and related products, higher prices may have also contributed to the uptick.
Are there signs of export resilience beyond the price effect?
The short answer is yes. According to Abhishek Upadhyay, co-head of research at I-Sec PD, the arithmetic signals that growth in volumes is weak and particularly for petroleum goods. But non-oil exports have held up, more so when we account for logistical challenges of exporting to the that is an important trans-shipment hub.
The export performance also came despite a 0.1% decline in shipments to the US and a modest 3.2% rise to the United Arab Emirates—two of India’s largest markets. That suggests exporters may have extracted higher value from other destinations, including Singapore, China and South Africa, among others.
Did exports help keep the trade deficit in check?
Yes, though the price effect also weighed heavily on imports. Inbound shipments rose 20.6% in May, driven by a 53.8% jump in oil imports. Even so, the trade deficit stayed at $28.2 billion, broadly in line with FY26 levels of $27.8 billion.
However, imports still grew faster than exports by about two percentage points, underscoring the persistence of India’s trade imbalance and its external vulnerability. A correction in oil prices, amid expectations of a possible peace deal later this week, could ease some pressure.
For now, the real test of export resilience lies in whether volumes can hold up even as prices remain elevated.