The steep US tariffs had raised concerns about India’s export outlook. However, the Economic Survey 2026 highlighted that India’s external sector is holding up better than many had expected. Despite slowing global growth, trade disruptions and fresh tariff pressures from major partners, exports have stayed resilient, supported by strong services earnings and a deliberate push to diversify trade relationships, as per the economic survey 2025-26.
Total exports, merchandise and services combined, touched a record $825.3 billion in FY25, according to the survey. That momentum has carried into the current year, with exports of $418.5 billion in the first half of FY26.
Steady numbers in a volatile year
Between April and December 2025, India’s total exports stood at $634.3 billion, up 4.3% year-on-year, even as global trade faced headwinds and the US imposed penal tariffs on select partners, as per the survey.
Merchandise exports rose 2.4% to $331.3 billion, with electronics standing out. Shipments of electronic goods grew 35.1% year-on-year, reflecting the impact of production-linked incentive schemes that have helped scale domestic manufacturing in recent years.
Services exports continued to anchor the external account, increasing 6.5% to $304 billion. Growth was driven by the expansion of global capability centres and a rising share of business and professional services.
According to the survey, imports during the same period rose 4.9% to $730.8 billion, resulting in a trade deficit of $96.6 billion. The gap, however, has remained manageable largely because of the surplus of services.
Why services still matter
India’s trade resilience rests on a familiar dynamic: services earnings consistently offset a large part of the merchandise trade deficit. In an environment of fragmented supply chains and uncertain demand, this surplus has provided a cushion, helping limit external vulnerability even as imports pick up, as per the survey. This structure has allowed India to absorb shocks without sharp adjustments, even as the global trading environment has become more unpredictable.
A push beyond traditional markets
Alongside steady trade flows, India has accelerated efforts to widen market access and reduce concentration risks. Over the past year, trade diplomacy has moved to the centre of the external sector strategy, with eight major free trade and partnership agreements concluded or advanced.
According to the survey, the India–UK trade agreement, finalised in July 2025, opens access across 137 services sub-sectors and removes the burden of dual social security contributions for professionals. Furthermore, the India-Oman CEPA was signed in December 2025. This FTA essentially provided duty-free access for 99.38% of India’s exports.
Earlier this week, India also concluded negotiations on a free trade agreement with the European Union, which is expected to strengthen export resilience and support manufacturing competitiveness once ratified. The survey added that the India–EFTA agreement, signed in October 2025, carries a binding $100 billion investment commitment, focusing on IT and business services exports.
Talks with New Zealand were wrapped up in December, while the India–UAE CEPA, already operational, continues to drive growth in segments such as gems, jewellery and auto components. Negotiations with the US, Chile and Peru are also at an advanced stage.
This effort is backed by strong financial buffers. Foreign exchange reserves stood at $701.4 billion in January 2026, providing nearly 11 months of import cover, the survey added.
A recalibrated external sector
Taken together, the data from FY26 so far point to an external sector that is adapting rather than reacting. Exports are growing steadily, services continue to do the heavy lifting, and trade policy is being used more actively to secure market access.