India’s merchandise exports are projected to increase by 3.64% year-on-year (YoY) in Q4 FY25, reaching ₹10.81 lakh crore ($124.8 billion), according to the Export-Import Bank of India (EXIM Bank). The non-oil export segment is expected to show even stronger growth of 11.34%, reaching ₹9.47 lakh crore ($109.3 billion).

India’s Export Performance and Recovery Trends

For FY25 as a whole, total merchandise exports are forecasted at ₹38.69 lakh crore ($446.5 billion), reflecting a 2.2% YoY growth over FY23, but exports have yet to fully recover from their FY23 peak of ₹38.45 lakh crore ($443.72 billion).

Key export categories driving growth include:

• Electronics and engineering goods – Increased global demand for India’s electronics and auto components.
• Agricultural products – Rice, garments, and handloom exports have seen strong performance.
• Manufacturing sector resilience – Improvements in industrial output have supported export expansion.

Trade Deficit Narrowing Amid Stronger Export Performance

India’s merchandise trade deficit narrowed to a three-month low of ₹1.90 lakh crore ($21.94 billion) in December 2024, supported by higher exports and slowing import pressures.

• November 2024 trade deficit: ₹2.84 lakh crore ($32.84 billion).
• Expected January 2025 trade deficit: ₹1.80 lakh crore ($20.88 billion), as per Union Bank of India’s report.

This improvement was primarily due to:

• A slowdown in gold imports following the festive and wedding season.
• Improved export demand for engineering goods, textiles, and agricultural products.

Global Trade Challenges and Future Outlook

Despite the positive export momentum, uncertainties remain, including:

• Trade policy shifts in major markets.
• Geopolitical tensions impacting supply chains.
• Economic slowdowns in key global economies.

However, EXIM Bank anticipates these trends to continue into Q1 FY26, with India’s non-oil and non-gems and jewellery exports growing at a steady pace.

Conclusion: India’s Export Growth on Track, But Risks Remain

India’s merchandise exports are showing signs of steady recovery, driven by strong manufacturing, agricultural resilience, and improving global demand. While global trade risks persist, India’s narrowing trade deficit and consistent export growth position it well for FY26 expansion.

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