India's Export Surge | 05 Mar 2026

Source: PIB

Why in News?

India's rising exports define its post-pandemic economic emergence, with the Economic Survey 2025-26 calling its growth "the envy of the world"—backed by strong banking, foreign reserves, and a stable current account. 

• This export momentum, strengthened by targeted import substitution, ensures India's competitive integration into global value chains.

What are Key Facts Regarding India's Export Performance?

• Overall Export Performance: India's total exports (goods and services combined) reached an estimated USD 720.76 billion between April 2025 and January 2026. This marks a growth of 6.15% compared to the same period the previous year, achieved despite global uncertainties.
• Export Diversification: India ranks among the top 5 globally for export product diversity and top 3 for trade partner diversity, helping it better withstand global demand fluctuations and supply chain disruptions.
• Sectoral Performance:
  • Petroleum Products: India is the 7th-largest exporter of refined petroleum products globally and ranks among the top 5 refining nations globally.
  • Electronic Goods: Electronics exports rose from the 7th-largest export category in FY22 to the 3rd-largest and fastest-growing in FY25. It is on track to become India's 2nd-largest export item. Smartphone exports in the first five months of 2025-26 touched Rs 1 lakh crore, a 55% rise over the same period last year.
  • Pharmaceuticals & Chemicals: India ranks 11th globally in pharmaceutical exports by value with a 3% global market share. Medical devices exports grew significantly from USD 2.5 billion in FY21 to USD 4.1 billion in FY25.
  • Textiles Exports: India is the 6th-largest global exporter of textiles and apparel with a 4% global market share. Textiles and apparel exports (including Handicrafts) increased from USD 35.87 billion in FY24 to USD 37.75 billion in FY25.
  • Automobile Exports: Overall automobile exports increased from 4,131 thousand units in FY21 to 5,357 thousand units in FY25, reflecting stronger global demand for India-made vehicles.
  • Defence Exports: Defence exports reached a record Rs 23,622 crore in FY 2024-25 (from less than Rs 1,000 crore in 2014), with Indian defence products now exported to over 100 countries including the United States, France, and Armenia. The government targets Rs 50,000 crore in defence exports by 2029.
  • Services Exports: India's services exports hit a record USD 387.5 billion in FY25, with a trade surplus of USD 188.8 billion. 
• Trading Partners and Trade Agreements: In the last 3 years, India signed 9 free trade agreements (FTAs) covering 38 countries, granting it zero-duty access to markets representing ~70% of global GDP. This strategy aims to diversify trade ties and reduce dependence on any single market.

What Steps have been Taken to Boost India's Exports?  

• Production-Linked Incentives (PLI) Schemes:
  • PLI Scheme for Automobile & Auto Components Industry: It promotes high-value Advanced Automotive Technology (AAT) vehicles and products, attracting cumulative investments of Rs 35,657 crore as of September 2025.
  • PLI for Bulk Drugs: Mitigates reliance on imported Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), and Drug Intermediates and created an annual manufacturing capacity of 55,000 metric ton (MT) for 26 critical products.
• Export Promotion Mission (EPM): It was approved with a total outlay of Rs 25,060 crore for FY 2025-26 to FY 2030-31 to strengthen the export ecosystem, improve access to affordable trade finance, and enhance global market readiness. The scheme operates through two sub-schemes i.e., Niryat Protsahan and Niryat Disha. Key EPM Interventions for export boost include:
  • E-Commerce Credit Assistance: Direct facility up to Rs 50 lakh with 90% guarantee; Overseas facility up to Rs 5 crore with 75% guarantee.
  • TRACE (Trade Regulations, Accreditation & Compliance Enablement): Reimburses 60-75% of compliance costs, capped at Rs 25 lakh per IEC annually.
  • FLOW (Facilitating Logistics, Overseas Warehousing & Fulfilment): Up to 30% of approved project cost for overseas warehousing.
  • LIFT (Logistics Interventions for Freight & Transport): Reimburses up to 30% of freight costs in low export-intensity districts, capped at Rs 20 lakh per IEC annually.
  • INSIGHT (Integrated Support for Trade Intelligence & Facilitation): Up to 50-100% of project cost for capacity-building and trade intelligence.
• Semiconductor and Electronics Manufacturing Initiatives:
  • Electronics Component Manufacturing Scheme (ECMS): The scheme, notified in 2025 with an outlay of  Rs 40,000 crores, aims to integrate India's electronics industry with Global Value Chains.
  • India Semiconductor Mission (ISM) 2.0: Launched in Union Budget 2026-27, focusing on industry-led research, technology development, and skilled workforce creation in semiconductor fabrication, assembly, testing, and chip design.
• Customs and Taxation Measures: Union Budget 2026-27 reduced customs duty on aviation parts, lithium-ion cell manufacturing, and defence and civil aviation components to lower manufacturing costs for aerospace, electronics engineering, and energy storage hardware.
• Sector-Specific Export Promotion: The PM E-DRIVE Scheme provides demand incentives for electric two-wheelers and three-wheelers, extends support to e-trucks and e-ambulances, and funds charging infrastructure.
  • Scheme to Promote Manufacturing of Electric Passenger Cars in India (SMEC) promotes electric car manufacturing for domestic and export markets. 
• Defence Export Promotion: Defence Acquisition Procedure (DAP) 2020 and Defence Procurement Manual (DPM) 2025 ensure speed, transparency, innovation, and self-reliance. 
  • Uttar Pradesh Defence Industrial Corridor (UPDIC) and Tamil Nadu Defence Industrial Corridor (TNDIC) attracted investments exceeding Rs 9,145 crore as of October 2025.
• Infrastructure and Ecosystem Development: To strengthen infrastructure and ecosystem development for capital goods and container manufacturing, the Union Budget 2026-27 announced initiatives such as Rare Earth Corridors, Chemical Parks, and Biopharma SHAKTI.
• Services Export Promotion: Services exports are being propelled by rapid Global Capability Centres (GCCs) expansion supported by SEZ tax incentives, and India's 2nd-place global ranking in AI skill penetration.

What are the Main Challenges Facing India's Export Sector?

• High Tariffs and Protectionism: The US administration's imposition of up to 50% tariffs on Indian goods in 2025 triggered a 22% decline in overall exports to the US. Affected sectors include shrimp (15% volume fall due to anti-dumping duties), textiles (10% contraction), and steel. 

  • Although an interim US-India trade deal reduced reciprocal tariffs from 50% to 18% on most goods starting February 2026, lingering protectionism persists.

• Non-Tariff Barriers and Climate-Related Hurdles: Exporters, particularly SMEs, grapple with complex non-tariff barriers under FTAs, including stringent Rules of Origin requirements, high documentation costs, audit risks, and inconsistent customs interpretations.
  • Compounding these challenges, the EU's Carbon Border Adjustment Mechanism (CBAM), effective from 2026, will impose carbon taxes on Indian exports of steel, aluminium, and cement, potentially increasing costs and reducing competitiveness in the European market.
• Diversification Challenges: India's export portfolio remains skewed toward the US, which accounts for approximately 18% of total exports, making it vulnerable to disruptions. Global demand slowdowns in advanced economies and currency volatility continue to hinder diversification. 
• Supply Chain Vulnerabilities: Geopolitical tensions, particularly in the Middle East which supplies about 55% of India's crude oil imports, pose significant risks to India's energy security and export costs. Broader geopolitical alignments are shifting trade away from efficiency toward security considerations, increasing exposure to shocks.
  • India-Gulf Cooperation Council (GCC) bilateral trade reached USD 178.56 billion in FY 2024-25, accounting for 15.42% of India’s global trade. With about 20% of global oil and gas flowing through the Strait of Hormuz, its blockade by Iran may cause oil and gas prices to surge in India. 
• Intensifying Sectoral Pressures: Intensifying competition from countries like Vietnam and Bangladesh is hurting India's labor-intensive export sectors, which are already facing crises and employment challenges. Complex trade negotiations with the US, including disputes over reciprocal tariffs such as India's 11% duty on American cotton, further complicate the outlook for these industries.

What Steps are Needed to Strengthen India's Export Sector?

• Bolster Policy Frameworks: Operationalize AI-driven "Single Window 2.0" integrating customs and certifications to streamline operations. India should swiftly conclude FTAs renegotiations to fix asymmetric structures, where imports rose 82% against export growth of 31% (2017-2022).
• Upgrade Logistics Infrastructure: Integrate Dedicated Freight Corridors with mega ports to reduce landed export costs by 20-30%. Invest in export processing zones, multi-modal parks, and cold chain facilities for agricultural exports.
• Ensure Sustainability Compliance: Develop national "Green Export Credit" facility to counter EU's CBAM on steel, aluminum, and cement. Establish indigenous carbon accounting frameworks for "carbon-neutral" branding.
• Scale Manufacturing: Expand PLI schemes including PLI 3.0 for rare earth and semiconductors through Sovereign Industrial Corridors. Initiatives like the Mahatma Gandhi Gram Swaraj Initiative (announced Union Budget 2026-27) will link traditional sectors such as handlooms to global markets via branding and training.
• Leverage Digital Growth: Remove Rs 10 lakh cap on e-commerce consignments to empower MSMEs. Implement blockchain-based trade platforms for rules of origin verification. Promote digital services exports through dedicated councils.
• Mitigating Supply Chain Risks: Establishing proactive buffer stocks for high-risk commodities like crude oil, rare earth elements, lithium, cobalt, and other critical minerals helps insulate the export sector from sudden shortages or price volatility.

Conclusion

India's export sector demonstrates resilient growth at 6.15% despite global headwinds, driven by diversification, PLI schemes, and the Rs 25,060 crore Export Promotion Mission. However, challenges like US tariffs, EU's CBAM, and geopolitical vulnerabilities require strategic interventions including infrastructure upgrades, sustainability compliance, and diversified trade agreements to achieve global competitiveness.