India trade FY2025-26: exports up, deficit widens

Why FY2025-26 trade numbers are being watched

India’s trade performance in FY2025-26 has become a widely discussed macro signal across markets. Industry body ASSOCHAM said trade flows and supply chains stayed steady from April to February despite tariff hikes and geopolitical tensions. The same commentary linked this resilience to active government measures and quick responses by businesses. Separately, the commerce ministry said exports continued to expand despite global uncertainty, supply chain disruptions, and volatile commodity prices. The discussion is also shaped by expectations that global trade volume growth may slow to 2.2% in 2026 from 3.8% in 2025. World trade growth in 2025 was described as stronger than expected at 3.8%, partly due to shipments made before new US tariffs took effect. Against that backdrop, India’s headline export and deficit prints are being read for momentum and risk. The numbers also highlight where India is gaining diversification and where import dependence is rising.

Total exports rise to $114.73 billion in Apr-Jan

The commerce ministry update said total exports of merchandise and services increased to $114.73 billion during Apr-Jan FY2025-26. This was reported as a $16 billion increase, or 5.26% growth, from $179.02 billion in Apr-Jan FY2024-25. The ministry described the trajectory as steady in the current fiscal year and over FY2021-25. It also cited a 6.9% compound annual growth rate for exports over FY2021-22 to FY2024-25. In the same update, exports were said to have risen from $197.90 billion in FY2020-21 to $128.25 billion in FY2024-25. Another widely shared milestone note put FY2024-25 total exports at $125.25 billion, also described as a record. Taken together, the messages point to sustained expansion even as the global backdrop remains uncertain. Investors often track these totals because they link to growth drivers, currency stability, and sector demand.

First-half FY2025-26: services lead, merchandise steady

For April to September 2025, total exports were reported at $118.91 billion, up 5.86% year-on-year. This was described as the highest ever export performance for the first half of any financial year. Services were highlighted as a major driver, with services exports at $187.54 billion in FY2024-25, up 13.63%. In the first half of FY2025-26, services exports were reported at $199.03 billion, up 9.34%. Merchandise exports were reported as steady at $137.70 billion in FY2024-25. Between April and September 2025, merchandise exports were reported at $119.88 billion, up 2.90%. Non-petroleum exports were noted at a historic $174.32 billion in FY2024-25, with 6.07% growth. This split matters because services can cushion the current account when goods trade turns more negative.

Q2 FY2025-26 shows faster export momentum

Trade Watch Quarterly coverage for July to September 2025 highlighted resilience amid global uncertainty. NITI Aayog Senior Lead Pravakar Sahoo told ANI that exports grew 8.5% in the quarter, improving over the previous quarter. In the same remarks, import growth was cited at 4.5%, implying a more favourable growth spread in that period. The report said both merchandise and services grew at around 8.5% in the quarter. It also said top export regions accounted for 89% of shipments, growing 7.7% year-on-year, led by North America and the European Union. Import growth of 4.7% was said to be led by East Asia and Latin America. The quarterly lens is important because it can show changes before they appear in full-year totals. It also frames sector discussions, especially around electronics.

Export destinations: US leads, Hong Kong enters top ten

ASSOCHAM said the US remained India’s top export market from April to February FY2025-26. Shipments to the US were cited at $19.3 billion, representing about 19.7% share over those eleven months. Trade ties with the UAE, China, the Netherlands, and the UK were also described as strong. Hong Kong was noted as joining the top ten export destinations, which was read as a diversification signal. A broader destination mix is often discussed as a shock absorber when tariffs or geopolitics disrupt specific corridors. At the same time, the data also suggests India remains meaningfully exposed to demand conditions in the US. Social discussions around tariffs have kept attention on how market access changes can affect export volumes. One cited policy development was a tariff reduction with the US, lowering rates from 25% to 18%, aimed at reducing uncertainty. The durability of India’s destination mix will be tested if global trade growth slows as projected.

Deficit stress shows up in January and February 2026

Merchandise deficit prints in early 2026 became a focal point because they widened sharply. India’s merchandise trade deficit was reported at $14.68 billion in January 2026, above $13.43 billion a year earlier and above market expectations of $16 billion. The January gap was described as the largest since October’s record $11.68 billion. In February 2026, the merchandise deficit was reported at $17.10 billion, nearly double $14.42 billion a year earlier, though slightly below expectations of $18.0 billion. February imports were reported up 24% year-on-year to $13.71 billion, driven by purchases of gold and silver. February exports were reported down 0.8% to $16.61 billion. Trading Economics context also cited an average balance of trade of -$1.19 billion from 1957 to 2026, and a record low of -$11.68 billion in October 2025. These monthly moves matter because they influence currency expectations and inflation sensitivity through import channels.

China trade gap widens sharply in Apr-Feb FY2025-26

A major challenge highlighted in the discussion is the widening deficit with China. From April to February FY2025-26, India imported $119.6 billion from China while exporting $17.5 billion. That implies a deficit of $102.1 billion over those eleven months. The commentary linked this imbalance to rising demand for Chinese industrial goods. Electronics, machinery, and pharma ingredients were cited as examples of import-heavy categories. The narrative suggests domestic production may not match the price advantage of imports in some segments. This is not only a trade issue but also a supply chain and industrial policy issue that can affect listed manufacturers. It also influences sector expectations for electronics, capital goods, and pharmaceuticals. The China deficit is being watched alongside diversification efforts in export destinations because it reflects a different kind of concentration risk. Any shift in sourcing, tariffs, or domestic capacity would show up first in this bilateral gap.

Electronics: export gains, but deficit still a concern

Electronics has been positioned as a strategic pillar in India’s manufacturing transformation. Trade Watch Quarterly said electronics is now the second-largest item in India’s export basket. Mobile phone exports were said to have reached close to $10 billion, reflecting recent sector gains. At the same time, the electronics trade deficit was described as widening over time. It was cited as rising from $15 billion in 2016 to nearly $10 billion, as domestic demand stays strong and imports of key components continue. The report also noted the global electronics market is valued at $1.6 trillion. India’s share in that market was put at around 1%, indicating scale-up potential. This combination of stronger exports and persistent component dependence is why the sector is a recurring theme in trade debates. For markets, the key tension is between export-led manufacturing momentum and the import intensity of the supply chain.

November 2025 snapshot: deficit eased after October spike

After the record merchandise trade deficit of $11.68 billion in October 2025, the deficit eased to $14.53 billion in November 2025. The data note said continued Russian oil purchases in November helped contain the oil-driven deficit. It also put the cumulative goods trade deficit at $123.14 billion as of end-November 2025. A 12-month comparison was provided: average merchandise exports of $16.74 billion and average imports of $12.83 billion, with an average deficit of $16.09 billion. In November 2025, total trade was cited at $100.79 billion, marginally above the 12-month average of $19.57 billion. The same snapshot listed key export and import contributors for the month.

Outlook cues: tariff uncertainty, forecasts, and global slowdown

ASSOCHAM projected total merchandise exports of $140 billion to $150 billion for FY2025-26. That forecast sits alongside a narrative that India’s trade has stayed robust despite headwinds. One supportive development cited in the discussion was a tariff reduction with the US from 25% to 18%. Even with such measures, the external environment may turn less supportive if global trade volume growth slows to 2.2% in 2026. The earlier 2025 world trade growth of 3.8% was partly linked to front-loading shipments ahead of new tariffs, which may not repeat. On the domestic side, the widening deficit with China and the import-driven spikes in recent monthly data remain key risk markers. Electronics illustrates both opportunity and dependence, with export progress but a growing deficit in components. For investors, the next prints that matter are whether services strength continues to offset goods deficits and whether destination diversification remains intact. The FY2025-26 story so far is resilience in exports, paired with clear stress points in imports and bilateral imbalances.