India’s merchandise exports grew for the second straight month despite challenges of high additional tariffs in its biggest market the US, expanding by 1.87% on year to $ 38.5 billion.
The drivers of the growth were electronics where the exports grew 16.78% to $ 4.17 billion, pharma which was up 5.65% to $ 2.63 billion and engineering goods which saw a growth of 1.28% to $ 10.98 billion.
“Despite all the challenges we have been facing there has been a positive movement in our export growth,” commerce secretary Rajesh Agrawal told reporters.
Apart from US tariffs other challenges include ongoing geo-political tensions, supply-chain realignments, inflationary pressures and rising protectionism across major economies.
The major sectors which witnessed deceleration in exports in December include petroleum products, gems and jewellery, rice, plastics, and leather products.
FY26 Outlook
For April-December merchandise exports are up 2.44% to $ 330.29 billion. With services included the overall exports in the first nine months of this fiscal are up 4.33% to $ 634.26 billion.
“One thing has become very clear with this trajectory is that until and unless there are very big externalities or changes we are going to cross $ 850 billion of exports in the current financial year – $ 450 billion merchandise and $ 400 billion services,” Agrawal said. Last financial India’s overall exports were $ 824.9 billion.
Services exports in December are expected to be down 3.97% on year to $ 35.50 billion, In April-December services exports are up 6.46% on year to $ 303.97 billion.
Textiles and marine products are the sectors most hit by the US tariffs. However, due to diversification the exports of readymade garments are up 2.89% on year to $ 1.50 billion. Marine product exports have increased 11.73% to $ 808 million in December.
Despite the 50% tariff by the US on Indian imports, the exports to US are still holding on. In December, India’s merchandise exports to the US were $6.89 billion compared to $7.01 billion in December of last year and $6.98 billion in November.
Smartphone Pivot
The exports to the US are still holding up as India is exporting more products like smartphones and pharmaceuticals that are exempt from additional tariffs.
In April-November India exported $ 18.8 billion worth of smartphones, a 43.96% growth over last year. The US market takes two-third of India’s exports of smartphones. This year the growth in the US market is 200%. Other markets for smartphones like UAE, China, Portugal and Spain are also picking up. New markets for the products are South Korea, Vietnam, Israel, Latvia and Slovakia.
Merchandise imports in December increased 8.76% on year to $ 63.55 billion, taking the deficit to $ 25.04 billion. Import growth drivers were electronics goods where an increase was 22.20% to $ 10.18 billion. Petroleum imports on the other hand were up 5.96% up to $ 14.40 billion while gold imports fell 12.08% to $ 4.13 billion. Imports in April-December grew 5.90% to $ 578.81 billion.