What Happened
- India's combined merchandise and services exports reached a record USD 860.09 billion in FY2025-26, a 4.22% increase over USD 825.26 billion in FY2024-25.
- Merchandise exports grew modestly to USD 441.78 billion (+0.93% over FY25's USD 437.70 billion), while services exports surged 7.94% to USD 418.31 billion from USD 387.55 billion.
- On the import side, total imports rose 6.47% to approximately USD 970 billion (merchandise: USD 774.98 billion; services: USD 204.42 billion), widening the overall trade deficit.
- Gold imports rose significantly in value — from USD 58.01 billion to USD 71.98 billion — though the quantity declined from 757 tonnes to 721 tonnes, reflecting higher global gold prices.
- March 2026 was the highest monthly merchandise export figure of the year at USD 38.92 billion, powered by petroleum products and engineering goods, even as the month saw a 7.44% YoY decline due to West Asia disruptions.
- Electronics emerged as the fastest-growing export sector, with 41.94% growth in H1 FY26, driven by PLI scheme successes.
Static Topic Bridges
India's Merchandise vs Services Exports
India's export basket has two broad components: merchandise (physical goods) and services (IT, financial, travel, transport, etc.). India runs a structural goods trade deficit but offsets it significantly through a services trade surplus — a defining feature of India's trade profile.
- Merchandise exports FY26: USD 441.78 billion (+0.93% YoY)
- Services exports FY26: USD 418.31 billion (+7.94% YoY)
- Services surplus in FY26: ~USD 213 billion (services exports minus services imports of ~USD 204 billion)
- Services exports are dominated by IT/ITeS (software, BPO), professional services, and financial services
- India's IT sector contributes ~60-65% of services exports
- Merchandise trade deficit: USD 333.2 billion; partially offset by services surplus and remittances (~USD 120 billion)
Connection to this news: The 4.22% overall export growth was overwhelmingly driven by services (+7.94%), masking near-stagnation in merchandise exports (+0.93%) amid global trade headwinds.
Key Merchandise Export Categories and Their Performance
India's merchandise export basket is led by petroleum products, engineering goods, chemicals and pharmaceuticals, gems and jewellery, and increasingly, electronics.
- Petroleum products: largest single export commodity (~16-18% of merchandise exports); value-added processing of imported crude
- Engineering goods: second-largest group (~25%); includes machinery, metals, transport equipment
- Electronics: fastest-growing sector in FY26; H1 FY26 growth of 41.94%; driven by PLI for mobile phones (Apple, Samsung)
- Gems and jewellery: major foreign exchange earner; sensitive to global demand and gold price movements
- Agriculture and allied exports: rice (basmati + non-basmati), marine products, spices
- Pharmaceuticals: India is the "pharmacy of the world" — generics exports to US, Africa, EU
- March 2026 surge: petroleum products, engineering goods, mica/coal/ores, cereals, handicrafts led growth
Connection to this news: The electronics PLI success story is notable — 41.94% H1 FY26 growth represents a genuine diversification of India's export base away from resource-intensive goods.
Production Linked Incentive (PLI) Scheme
PLI schemes were launched by the Government of India across 14 sectors to incentivise domestic manufacturing and exports. The scheme offers financial incentives (4–6% of incremental sales) to qualifying manufacturers who achieve production thresholds.
- Announced: 2020–21 (first tranche), expanded across sectors by 2021–22
- Total outlay: ~₹1.97 lakh crore across all 14 sectors
- Key sectors with highest export impact: Mobile phones/electronics, pharmaceuticals, food processing, textiles, specialty chemicals
- Mobile phones PLI: attracted Apple (via Foxconn, Pegatron, Wistron) and Samsung; India now exports iPhones globally
- Electronics exports grew 41.94% in H1 FY26 — the highest sectoral growth across all major categories
- PLI for textiles: targets man-made fibres (MMF) and technical textiles; separate from apparel
Connection to this news: PLI-driven electronics export growth is a bright spot in an otherwise muted merchandise export performance, pointing to India's evolving role in global electronics supply chains.
India's Trade Policy Framework
India's trade policy is administered by the Ministry of Commerce and Industry under the Foreign Trade Policy (FTP). The current FTP 2023–28 emphasises export diversification, e-commerce exports, and bilateral trade deals.
- Foreign Trade Policy 2023–28: targets USD 2 trillion in exports (goods + services) by 2030
- FY26 total exports: USD 860 billion — significant gap remains to reach USD 2 trillion by 2030
- Active FTA negotiations: EU, UK, Canada, GCC (Gulf countries)
- India-UAE CEPA (2022): first completed modern trade agreement; covers goods, services, investment
- District Export Hubs: programme to promote exports from tier-2/3 districts
- Department of Commerce under Commerce Ministry publishes monthly trade data
Connection to this news: At USD 860 billion, India is roughly 43% of the way toward the USD 2 trillion export target, requiring sustained annual growth of ~14% from current levels.
Key Facts & Data
- Total exports FY26 (merchandise + services): USD 860.09 billion (+4.22% YoY)
- Total exports FY25: USD 825.26 billion
- Merchandise exports FY26: USD 441.78 billion (+0.93%)
- Merchandise exports FY25: USD 437.70 billion
- Services exports FY26: USD 418.31 billion (+7.94%)
- Services exports FY25: USD 387.55 billion
- Total imports FY26: ~USD 970 billion (+6.47%)
- Merchandise imports FY26: USD 774.98 billion
- Services imports FY26: USD 204.42 billion
- Gold imports value FY26: USD 71.98 billion (up from USD 58.01 billion)
- Gold imports volume FY26: 721 tonnes (down from 757 tonnes)
- Merchandise goods trade deficit FY26: USD 333.2 billion (widened)
- Overall trade deficit (merchandise + services) FY26: ~USD 119.3 billion
- March 2026 merchandise exports: USD 38.92 billion (highest monthly in FY26)
- Electronics export growth H1 FY26: +41.94%
- India's export target (FTP 2023–28): USD 2 trillion by 2030