Page 25 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Foreign Currency Assets (FCA), the largest component of forex reserves, declined by US$6.483 billion to
US$545.904 billion during the reporting week. The movement in FCAs also reflects valuation effects arising
from fluctuations in major global currencies such as the euro, pound sterling, and Japanese yen against
the US dollar.

The RBI continued to actively intervene in the foreign exchange market to contain excessive volatility in
the rupee. Market reports indicated that the central bank sold an estimated US$2–3 billion during May
2026 to stabilize currency movements amid rising global uncertainty and higher energy prices.

Despite recent moderation, India’s forex reserves continue to provide a strong buffer against external
shocks, imported inflation, and global financial market volatility, while supporting exchange rate stability
and external financing requirements.

External Trade Developments

India’s Exports Register Strong Double-Digit Growth in April 2026

India’s external trade sector recorded strong growth in April 2026 despite continued global economic
uncertainty and supply-side disruptions. Total exports (merchandise and services combined) were
estimated at US$80.80 billion during April 2026, registering a growth of 13.59 % compared to US$71.13
billion in April 2025. Total imports during the month stood at US$88.61 billion, reflecting a comparatively
moderate growth of 7.67 % year-on-year.

Merchandise exports during April 2026 increased to US$43.56 billion from US$38.28 billion in April 2025,
recording a growth of 13.78 %. Non-petroleum exports also remained robust, rising by 9.01 % to US$33.97
billion compared to US$31.16 billion in the corresponding period of the previous year.

The growth in merchandise exports was primarily driven by strong performance in petroleum products,
electronic goods, engineering goods, meat, dairy & poultry products, and drugs & pharmaceuticals.
Petroleum product exports recorded a sharp increase of 34.66 %, rising from US$7.12 billion in April 2025
to US$9.59 billion in April 2026, supported by higher global prices and export volumes.

Electronic goods exports continued to demonstrate significant momentum, increasing by 40.31 % from
US$3.69 billion to US$5.18 billion, reflecting expanding domestic electronics manufacturing capacity and
stronger global demand. Engineering goods exports also increased by 8.76 %, indicating continued
resilience in industrial and manufacturing exports despite slowing global trade conditions.

The strong export performance highlights the resilience of India’s external sector, supported by
manufacturing expansion, diversification of export products, and strengthening competitiveness in high-
value sectors such as electronics, engineering, and pharmaceuticals.

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