India Tops Emerging Markets Tracker in May 2026

TL;DR

• India reclaimed the No. 1 rank on Mint’s Emerging Markets Tracker (EMT) in May 2026, ending a six month gap, with a composite score of 68.05 out of 100.
• Exports and factory output drove the rebound: merchandise exports grew 17.99% YoY (up from 13.8% in April) and manufacturing PMI rose to 55.
• The rupee weakened for a third straight month, depreciating 2.04% against the US dollar in May, its steepest monthly decline since March as crude oil imports got costlier.
• Wholesale inflation (WPI) hit 9.68% in May, a 42 month high, driven by a 30.33% jump in fuel and power inflation and a 61.51% spike in crude petroleum and natural gas prices.
• China (63.18) and Vietnam (61.09) rounded out the top three, with Vietnam posting the single biggest jump from 8th to 3rd on 7.83% GDP growth and 18.52% export growth.
• Relief is coming, but slowly: India Ratings expects WPI to ease to ~9.3% in June as the Israel-Iran ceasefire filters through to fuel costs, though Crisil flags that sectors representing 17% of India’s GVA remain highly exposed to energy costs.

India’s Return to the Top of the Rankings Was Broad Based, Not a Single Indicator Story

India rose one place to reclaim the top spot on the EMT in May 2026, an index that has tracked 12 large emerging markets across seven high frequency indicators since September 2019: GDP growth, manufacturing PMI, export growth, retail inflation, import cover, exchange rate movement and stock market performance. The composite score of 68.05 reflected strength on the two indicators most tied to real economic momentum trade and factory output rather than a one off spike in a single metric.

Merchandise exports expanded 17.99% year on year in May, accelerating sharply from 13.8% in April, while the manufacturing PMI climbed to 55, signaling faster growth in factory activity. India also held an import cover of just over 10 months, a buffer that matters more than usual given the currency and inflation pressures building elsewhere in the data.

The Rupee’s Third Straight Month of Losses Is the Cost of Winning the Export Race

The other side of a stronger export and factory print was a weaker currency. The rupee depreciated 2.04% against the US dollar in May, its steepest monthly decline since March and its third consecutive month of losses. Average exchange rates moved from 90.7 per dollar in February to 95.5 in May, as elevated crude prices and the West Asia war weighed on the currency.

This matters directly for import dependent sectors: India sources more than 85% of its crude oil requirement from overseas, so a weaker rupee raises the landed cost of oil, LNG, fertilizers and industrial raw materials even when global commodity prices hold flat. Refiners pay more per barrel in rupee terms, transport companies absorb higher fuel bills, and manufacturers importing chemicals, metals and electronic components see input costs rise, costs that eventually surface in freight charges and factory gate pricing.

The flip side is a competitiveness tailwind for exporters, who earn more rupees per dollar of overseas revenue. But that benefit is uneven: sectors reliant on imported inputs: automobiles, chemicals, consumer goods and fertilizers among them face margin pressure unless they can pass costs through to consumers.

Wholesale Inflation Surged to a 42 Month High as the Oil Shock Fed Through the Supply Chain

India’s Wholesale Price Index (WPI) inflation surged to 9.68% in May 2026, the highest reading in 42 months, according to the Department for Promotion of Industry and Internal Trade. The drivers were concentrated almost entirely in energy:

• Fuel and power inflation accelerated to 30.33%
• Crude petroleum and natural gas inflation climbed to 61.51%
• Mineral oils inflation reached 49.82%

Products such as sulphur, aviation turbine fuel (ATF), liquefied petroleum gas (LPG), sulphuric acid and bitumen recorded some of the sharpest month on month and year on year price increases. The pass-through extended into manufactured products as well, with basic metals, chemicals and textiles facing higher input costs as firms absorbed costlier fuel and imported raw materials.

Wholesale inflation typically reaches consumers with a lag, which means the May print is a leading indicator of margin pressure rather than a fully realized cost. Crisil estimates that sectors accounting for 17% of India’s gross value added (GVA) face high exposure to rising energy costs, while another 39% falls into the moderate impact category: aviation, construction, chemicals, automobiles and engineering among the sectors most exposed unless they can pass costs through pricing.

The Israel-Iran Ceasefire Should Ease the Pressure, but the Adjustment Will Be Gradual

Crude oil prices have eased following the Israel-Iran ceasefire, and both India Ratings and Icra expect this to soften WPI inflation in the coming months. India Ratings projects wholesale inflation moderating to around 9.3% in June. However, both agencies expect the adjustment to be gradual rather than immediate, as businesses work through inventories and supply contracts signed when oil prices were higher. Food prices add a further wildcard: elevated levels could persist if El Niño affects the monsoon, delaying broader disinflation.

How India Compares to Other Emerging Markets

Source: Bloomberg, Mint calculations. Data as of 28 June 2026. Scores may shift as more data comes in.

China moved up two places to second, supported by 19.39% export growth the fastest among the top three economies and a 6.94% gain in stock market capitalization. Vietnam was the standout mover, jumping five ranks from eighth to third on 7.83% GDP growth, 18.52% export growth and a manufacturing PMI of 52.8, underscoring its position as one of Asia’s fastest growing manufacturing and export hubs.

What This Means for India Focused Investors

For allocators tracking India’s private markets and macro trajectory, the May 2026 data present a two-sided picture that’s worth holding in tension rather than resolving too quickly:

• The growth engine is intact. Export and manufacturing momentum accelerating simultaneously is a stronger signal than either indicator alone; it points to genuine external demand plus domestic capacity utilization, not just a currency-driven export illusion.
• The inflation shock is a cost-side event, not a demand-side one. A WPI spike driven by crude petroleum, fuel and mineral oils is fundamentally different from inflation driven by overheating demand. It compresses margins in energy-intensive sectors but doesn’t necessarily signal broader economic overheating which matters for how public market and private equity investors underwrite near-term earnings versus structural growth.
• Sector exposure will be uneven. With 17% of India’s GVA in high energy-exposure sectors and another 39% in moderate-exposure territory per Crisil, portfolio construction and due diligence should account for pricing power and input-cost pass-through capacity as differentiators over the next one to two quarters.
• The rupee’s third consecutive month of depreciation is a variable worth monitoring for cross-border capital flows, though India’s retained import cover of over 10 months provides a meaningful buffer against external shocks relative to peers with thinner reserves.

Reference: Mint’s Emerging Markets Tracker, “India Tops EMs in May Despite Oil Concerns” (Plain Facts, Mint, 30 June 2026), based on Bloomberg and Department for Promotion of Industry and Internal Trade data.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: Why did India top the Emerging Markets Tracker in May 2026?

A: India's composite score of 68.05 was driven primarily by 17.99% year on year export growth and a manufacturing PMI of 55, both of which pointed to accelerating trade and factory activity relative to April.

Q: Why did India's wholesale inflation hit a 42 month high?

A: WPI inflation reached 9.68% in May 2026 mainly because of an oil price shock from the West Asia war, which pushed fuel and power inflation to 30.33% and crude petroleum and natural gas inflation to 61.51%, before spilling into manufactured products like basic metals, chemicals and textiles.

Q: Is the rupee's depreciation a concern for investors?

A: The rupee fell 2.04% against the US dollar in May 2026, its third straight monthly decline. While this raises import costs particularly for crude oil, given India imports over 85% of its requirement, India's import cover of just over 10 months offers a buffer, and exporters benefit from improved dollar competitiveness.

Q: When is wholesale inflation expected to ease?

A: India Ratings expects WPI to moderate to around 9.3% in June 2026 as the Israel-Iran ceasefire feeds through to lower global energy prices, though both India Ratings and Icra expect the adjustment to be gradual as businesses work through existing inventory and supply contracts.

Q: How does India compare to China and Vietnam on the tracker?

A: India led with a composite score of 68, followed by China at 63 (driven by 19.39% export growth) and Vietnam at 61, which posted the biggest jump of any economy, climbing from eighth to third on strong GDP growth, export growth and manufacturing PMI.

Sources

Mint