India enters FY27 with resilient exports, stronger FDI despite wider trade deficit: RBI Bulletin
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India's external sector shows resilience as merchandise exports increased to $45.14 billion in May 2026, driven by both oil and non-oil shipments, despite a widening merchandise trade deficit due to rising imports. Foreign direct investment inflows surged to $6.5 billion in the first two months of FY27, reflecting strong foreign investor interest, although portfolio investments experienced a net outflow of $12 billion. Overall, while imports are pressuring the trade balance, robust exports and FDI inflows are supporting the external sector.
India’s external sector entered FY27 with resilient merchandise exports and stronger foreign direct investment (FDI) inflows, although a rise in imports widened the merchandise trade deficit, according to the latest Reserve Bank of India (RBI) Bulletin.
The bulletin showed that merchandise exports rose to $45.14 billion in May 2026, up from $43.72 billion in April, led by both oil and non-oil shipments. Non-oil exports increased to $36.74 billion in May from $33.98 billion a month earlier, indicating broad-based export activity.
Merchandise imports also increased during the month to $73.40 billion, compared with $71.93 billion in April, largely due to higher oil imports. As a result, the merchandise trade deficit widened marginally to $28.26 billion in May from $28.21 billion in April.
On the investment front, net foreign direct investment stood at $6.5 billion during April-May FY27, significantly higher than $2.47 billion recorded in the corresponding period of the previous financial year. Gross FDI inflows into India rose to $13.77 billion during the first two months of FY27, reflecting continued foreign investor interest.
However, the bulletin showed that portfolio investment remained in net outflow during April-May FY27, at $12 billion, resulting in overall foreign investment outflows of $5.5 billion during the period despite stronger FDI inflows.
Meanwhile, outstanding non-resident Indian (NRI) deposits stood at $165.96 billion in May 2026, while inflows during April-May FY27 amounted to $1.33 billion, continuing to provide a stable source of external financing.
The RBI Bulletin data indicate that while higher imports continue to exert pressure on the trade balance, resilient exports and stronger FDI inflows provide support to India’s external sector at the start of FY27.
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Published on Hindu BusinessLine