India's total exports hit record $863 billion in FY26, services surge 8.7%

India's combined merchandise and services exports reached an all-time high of $863.11 billion in FY26 (April 2025–March 2026), growing 4.59% over $825.26 bil...

What Happened

India's combined merchandise and services exports reached an all-time high of $863.11 billion in FY26 (April 2025–March 2026), growing 4.59% over $825.26 billion in FY25.
Merchandise exports stood at $441.78 billion, growing 0.93% over $437.70 billion in FY25, despite global headwinds including US tariff uncertainties.
Services exports surged to $421.32 billion, a growth of 8.71% over $387.55 billion in FY25 — crossing $400 billion for the first time.
Each of the four quarters of FY26 individually recorded their highest-ever export performance, a first in India's trade history.
The merchandise trade deficit widened to approximately $333 billion in FY26, but a strong services surplus and remittances kept the Current Account Deficit at around 1% of GDP.

Static Topic Bridges

India's Foreign Trade Policy (FTP) 2023

The Foreign Trade Policy 2023, notified by the Ministry of Commerce and Industry effective April 1, 2023, provides the overarching framework for India's export promotion. Unlike earlier fixed-term policies (such as FTP 2015-20), FTP 2023 is a living document with no fixed end date, allowing for continuous updates in response to global trade conditions. It is built on four pillars: Incentive to Remission, Export Promotion through Collaboration, Ease of Doing Business, and Emerging Areas.

Advance Authorisation Scheme: duty-free imports of inputs for manufacturing export items.
EPCG (Export Promotion Capital Goods) Scheme: duty concessions on capital goods imports against export obligations.
E-commerce export consignment limit raised from ₹5 lakh to ₹10 lakh.
An Amnesty Scheme was introduced for clearing export obligation defaults.
Policy administered through the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry.

Connection to this news: FTP 2023's emphasis on ease of doing business, services exports, and diversification of export destinations has contributed to the record performance in FY26, particularly in knowledge-intensive services.

Balance of Payments (BoP) and Current Account

India's Balance of Payments captures all economic transactions between India and the rest of the world. The Current Account, a key BoP component, records trade in goods (merchandise), trade in services, income flows, and current transfers (including remittances). India typically runs a merchandise trade deficit offset partially by a services trade surplus and large remittance inflows.

India's merchandise trade deficit widened to ~$333 billion in FY26.
Services exports at $421.32 billion are now nearly equivalent to merchandise exports ($441.78 billion), a historic first.
Services surplus (~$147 billion) plus remittances (~$129 billion, India remains world's largest recipient) substantially offset the merchandise deficit.
India's Current Account Deficit (CAD) was approximately 1% of GDP in FY26, considered a comfortable level.
Data compiled by the Directorate General of Commercial Intelligence and Statistics (DGCI&S) under the Ministry of Commerce.

Connection to this news: The surge in services exports has structurally reduced India's external vulnerability by shrinking the effective CAD, even as merchandise imports remain high.

India's Services Export Composition

India's services exports are dominated by IT/ITeS (Information Technology and IT-enabled Services), which account for over 65% of total services exports. Key sub-segments include software services, business process outsourcing (BPO), financial services, travel, and professional consulting. The US, Europe, and the UK together account for approximately 86% of IT-ITeS export destinations.

Software and IT services: largest segment, reflecting India's comparative advantage in skilled English-speaking workforce.
BPO exports were approximately $45 billion in FY25, growing at a CAGR of 7.8% over FY2015-25.
BPO export growth outpaced IT services growth for consecutive years, a trend expected to continue through FY26.
NASSCOM is the apex body for the IT-BPM (Business Process Management) industry in India.
General Agreement on Trade in Services (GATS), under WTO, governs international trade in services across four modes of supply.

Connection to this news: The 8.71% surge in services exports in FY26 reflects India's deepening integration into global value chains in knowledge services, with BPO and technology-driven services leading growth.

Key Facts & Data

Total exports FY26: $863.11 billion (all-time high)
Total exports FY25: $825.26 billion
Year-on-year growth: 4.59%
Merchandise exports FY26: $441.78 billion (growth: 0.93%)
Services exports FY26: $421.32 billion (growth: 8.71%) — first time crossing $400 billion
Merchandise trade deficit FY26: ~$333 billion (widened 17.5%)
Current Account Deficit (CAD): ~1% of GDP (manageable range)
All four quarters of FY26 posted quarter-specific all-time highs — a first in India's trade history
FTP 2023 operative from: April 1, 2023 (no fixed end date)
DGCI&S is under the Ministry of Commerce and Industry