India’s trade deficit slipped in May, easing marginally from April’s level even as the gap remained broader than analysts had forecast. Government data showed a slight contraction, signaling that the country’s export‑import balance is stabilising. Officials linked the improvement to an interim US‑Iran accord that promises to reopen the Strait of Hormuz. The shift mirrors modest export growth and a dip in oil imports.

Shipping through the Hormuz corridor accounts for a sizable share of global oil and commodities moving to and from South Asia. By easing a chokepoint that has periodically spiked freight rates, the agreement could lower transport costs for Indian exporters and reduce input price pressure for manufacturers. Analysts note calmer lanes may lift turnover. Traders watch the development for signs of broader regional risk mitigation.

Investors interpret the narrowing gap as a modest buffer against currency volatility and a cue that demand fundamentals remain intact. While the deficit still exceeds expectations, the US‑Iran step removes a geopolitical tailwind that previously threatened supply chains. This clarity helps foreign investors allocate capital to Indian equities with confidence.