India's external sector showed a mixed picture at the start of FY27, with resilient merchandise exports and stronger FDI inflows, according to the RBI. However, a rise in imports, particularly oil, widened the merchandise trade deficit slightly.

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 RBI Bulletin.

Merchandise Trade Performance

The bulletin showed that merchandise exports rose to USD 45.14 billion in May 2026, up from USD 43.72 billion in April, led by both oil and non-oil shipments. Non-oil exports increased to USD 36.74 billion in May from USD 33.98 billion a month earlier, indicating broad-based export activity.

Merchandise imports also increased during the month to USD 73.40 billion, compared with USD 71.93 billion in April, largely due to higher oil imports. As a result, the merchandise trade deficit widened marginally to USD 28.26 billion in May from USD 28.21 billion in April.

Foreign Investment Trends

On the investment front, net foreign direct investment stood at USD 6.5 billion during April-May FY27, significantly higher than USD 2.47 billion recorded in the corresponding period of the previous financial year.

Gross FDI inflows into India rose to USD 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 USD 12 billion, resulting in overall foreign investment outflows of USD 5.5 billion during the period despite stronger FDI inflows.

Stable External Financing

Meanwhile, outstanding non-resident Indian (NRI) deposits stood at USD 165.96 billion in May 2026, while inflows during April-May FY27 amounted to USD 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. (ANI)

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