India's export outlook for FY27 remains challenging, but the worst is over, according to a report by Elara Securities. The brokerage's assessment comes on the back of resilient May trade data, which showed a 16% year-on-year rise in overall exports to nearly USD 82 billion, driven by a record goods export figure of USD 45.2 billion, up 18% from a year ago.
May Export Performance
According to Elara Securities, India's goods exports to countries other than the USA surged 37% compared with the pre-tariff period (January 2025 baseline), while exports to the USA fell 13% from their March 2025 peak. The decline in US-bound shipments reflects American importers advancing purchases ahead of tariff measures.
| Export Destination | Growth vs Pre-Tariff (Jan-25=100) | Change from Peak (Mar-25) |
|---|---|---|
| Excluding USA | +37% | N/A |
| USA | N/A | -13% |
Current Account and Trade Balance
The Reserve Bank of India's balance of payments data showed a current account surplus of USD 4.7 billion in April 2026, supported by remittances of USD 16 billion and a services trade surplus of USD 18.6 billion. However, capital outflows, particularly foreign portfolio investment withdrawals, kept the overall balance of payments in deficit.
Electronics Deficit a Growing Concern
The report cautioned that rising electronics imports remain a concern. The electronics trade deficit surged to USD 7.2 billion in May 2026 from USD 4.5 billion a year earlier, now accounting for one-fourth of India's total goods trade deficit.
Relief Factors
Elara Securities noted that softer crude oil prices and potential moderation in freight costs due to the opening of the Strait of Hormuz could normalize India's import bill toward a run rate of USD 60 billion per month. Additionally, gains from nearly 10% rupee depreciation over the past year, along with continued strength in services exports and remittance inflows, are expected to limit pressure on the current account despite global demand challenges.
In summary, while the export outlook for FY27 is challenging, Elara Securities believes the worst is behind, citing the resilience seen in May data and the anticipated easing of input costs.
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