The latest trade data from India suggest a regional realignment of the country's trade balance. While India's trade surplus with traditional allies such as the United States and the Netherlands fell in the first two months of FY27, its trade balance with Asia and Africa shifted drastically from deficits to surpluses a year ago.
As goods imports from the United States increased nearly 55% year on year (YoY) to a record high of $5.87 billion in May, while exports remained largely unchanged, India's trade surplus with the country fell to $6.15 billion in the first two months of the current fiscal year from $7.87 billion the previous year.
On the other hand, India's exports to Singapore increased dramatically, bringing the trade balance to a $665 million surplus in April-May, up from a $1.3 billion deficit the previous year. South Africa had a similar reversal, with the trade balance shifting from a $17 million deficit to a $492 million surplus last year.
Even more profound developments were seen in the immediate neighborhood and throughout Africa. India's trade surplus with Tanzania grew to $1.71 billion from $77 million, thanks to a 172% increase in exports. Sri Lanka followed a similar track, with exports nearly tripling, driving India's trade surplus to more than $1 billion from $404 million a year before.
However, the geographical movement was not completely uniform. India's trade deficit with the United Arab Emirates (UAE) dropped to $4.53 billion from $6.18 billion, but commerce has yet to recover fully from disruptions caused by the West Asia conflict. Meanwhile, India's trade deficit with China widened dramatically, reaching $20 billion in the first two months of the fiscal year.
Looking at Europe, demand showed a mixed picture. Although the surplus with the Netherlands contracted, shipments to Italy and Spain increased by more than 40%, easily boosting India's surplus margins in southern Europe.
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