India’s Exports and FDI Strengthen in Early FY27; Trade Deficit Widens: RBI Bulletin

India began the financial year 2026–27 with continued export momentum and a substantial increase in foreign direct investment, while higher import expenditure kept pressure on the merchandise trade balance, according to data presented in the latest Reserve Bank of India Bulletin.

Merchandise exports increased from USD 43.72 billion in April 2026 to USD 45.14 billion in May 2026. The improvement was supported by both petroleum and non-petroleum shipments. Non-oil exports recorded notable growth, rising to USD 36.74 billion from USD 33.98 billion during the same period, indicating wider participation across export-oriented sectors.

Imports also moved upward, reaching USD 73.40 billion in May compared with USD 71.93 billion in April. The increase was primarily attributed to a higher oil import bill. Consequently, India’s merchandise trade deficit expanded slightly from USD 28.21 billion in April to USD 28.26 billion in May 2026.

Foreign direct investment showed considerable improvement during the opening months of FY27. Net FDI reached USD 6.5 billion in April–May 2026, compared with USD 2.47 billion in the corresponding period of FY26. Gross FDI inflows stood at USD 13.77 billion, reflecting sustained interest among overseas investors.

Foreign portfolio investment, however, remained under pressure. Net portfolio outflows amounted to USD 12 billion during April–May FY27. As a result, total foreign investment recorded a net outflow of USD 5.5 billion, despite the improvement in direct investment flows.

NRI deposits continued to contribute to India’s external financing position. Outstanding deposits held by non-resident Indians were valued at USD 165.96 billion in May 2026, while fresh inflows during April–May FY27 totalled USD 1.33 billion.

The data indicate a mixed external-sector position at the beginning of FY27. Stronger exports, rising non-oil shipments and improved FDI provided support, while elevated imports, portfolio withdrawals and a wider trade deficit remained areas requiring close monitoring. CA Sansaar