India’s export outlook is expected to remain challenging in FY27 amid moderating global demand and rising electronics imports, but the most difficult phase appears to be over, according to a report by Elara Securities.
The brokerage said that a weaker rupee, resilient services exports, and strong remittance inflows are likely to provide support to India’s external sector, helping cushion pressures from slowing global trade activity.
Elara Securities noted that softer crude oil prices and a potential easing in freight costs, particularly if shipping through the Strait of Hormuz normalises, could help reduce India’s import bill in the coming months. The report expects imports to stabilise closer to a monthly run rate of around USD 60 billion, offering relief to the country’s trade balance.
India’s external sector remained resilient in May despite ongoing global trade uncertainties. Total exports rose nearly 16 per cent year-on-year to around USD 82 billion, driven by a record goods export performance of USD 45.2 billion, up 18 per cent from the previous year.
However, imports climbed 20.6 per cent year-on-year to USD 73.4 billion, resulting in the goods trade deficit widening to USD 28.2 billion from USD 22.6 billion in May 2025.
According to the report, the depreciation of the rupee has started improving India’s export competitiveness. Elara Securities highlighted that India’s goods exports reached an all-time high even as imports remained elevated due to energy-related costs.
The report also pointed to a notable shift in India’s export destinations following tariff-related disruptions in global trade. India has diversified its export markets and reduced its reliance on the United States. Exports to countries other than the US increased 37 per cent compared with the pre-tariff period, while exports to the US rose only 4 per cent over the same period. Exports to the US have declined 13 per cent from their March 2025 peak after American importers advanced purchases ahead of tariff measures.
On the current account front, Reserve Bank of India data showed a surplus of USD 4.7 billion in April 2026, supported by remittance inflows of USD 16 billion and a services trade surplus of USD 18.6 billion. Despite this, foreign portfolio investment outflows contributed to an overall balance of payments deficit.
The report cautioned that rising electronics imports remain a key concern. India’s electronics trade deficit widened sharply to USD 7.2 billion in May 2026 from USD 4.5 billion a year earlier and now accounts for nearly one-fourth of the country’s total goods trade deficit.
Elara Securities said that the benefits of nearly 10 per cent rupee depreciation over the past year, combined with sustained strength in services exports and remittance inflows, should help contain current account pressures despite weaker global demand and growing electronics import costs.
