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Kolkata: India's export performance in 2025 will come under intense scrutiny by trade economists all over the world and policymakers in India for two reasons. One, economists will study it to find out the nuances of the impact of the highest tariffs on goods imports in the world slapped by the US and Indian policymakers will study it to find out how to finetune the efforts designed to help the country's exporters as the tariff whiplash continues from one of India's closest allies.
In fact, the whimsical tariffs on India by US President Donald Trump has brought India's export performance under scrutiny. A few things already stand out and a macro forecast is that India's current account deficit (CAD) would be 1% of GDP in spite of the US tariff-led export decline. A current account deficit essentially means an economy spends more on imports than it earns from exports.
"Looking ahead, as merchandise exports navigate a challenging environment, we expect the services trade surplus and transfers to maintain their support. This, coupled with benign global crude oil prices, is likely to keep India's current account deficit broadly manageable at around 1% of GDP in FY26," mentioned a report by CareEdge. The agency also mentioned that export performance has begun to suffer from since September after a record in the first half of the current financial year. It said that non-petroleum exports shrunk 3.9% in September-October 2025.
The impact of the US tariffs has been most acutely felt in labour-intensive sectors such as textile and gems and jewellery. In October-November, textile exports (excluding readymade garments) dipped 9.5% while that of gems and jewellery fell 15.6%.
Before the tariffs hit exports in Q3, the country posted US$418.91 total exports billion in the H1 period (April–September 2025). It marked a 5.86% rise over the same period in 2024. In fact, in FY25, India's exports touched a record of $825.25 billion. But then the tariffs hit performance which was coasting towards another record. What's significant about the H1FY26 performance is that exports in Q1 and Q2 of the current fiscal registered highest ever figures in their respective quarters.
The country's services sector continued to anchor the growth in overall exports. While services posted a record $387.54 billion in FY25, it stood at $199.03 billion in the H1FY26 period (April–September 2025), thereby registering a 9.34% jump against the same period in 2024.
Disaggregating the export figures destinationwise, the following data emerged: the US (13.34%), the UAE (9.34%), China (21.85%), Spain (40.30%) and Hong Kong (23.53%). Exports too all these countries increased compared to the same period in 2024. IN the goods sector, the main items shipped out were electronic goods (41.94%), engineering goods (5.35%), drugs and pharmaceuticals (6.46%), marine products (17.40%) and rice (10.02%).
One of the trends that characterised India's quest for boosting exports in a post-US tariff is the flurry of negotiations to strike Free Trade Agreements (FTA) with different countries. Perhaps the most important of these is the India–UK Comprehensive Economic and Trade Agreement. It has ensured duty-free access for 99% of Indian exports. Other strategic agreements are the UAE–India Comprehensive Economic Partnership Agreement (CEPA), the Australia–India Economic Cooperation and Trade Agreement (ECTA) and the agreement with the European Free Trade Association (EFTA).
Apart from the above, India is conducting negotiations for the following trade agreements:
India-European Union Free Trade Agreement (FTA)
India-USA Bilateral Trade Agreement
India Australia Comprehensive Economic Cooperation Agreement (CECA)
India-New Zealand Free Trade Agreement (FTA)
India-Chile Free Trade Agreement (FTA)
India–Korea CEPA
India-Peru Free Trade Agreement (FTA)
India-Sri Lanka Economic and Technology Cooperation Agreement (ETCA)
India-EAEU Free Trade Agreement (FTA)
India-Maldives Free Trade Agreement (FTA)
ASEAN-India Trade in Goods Agreement (AITIGA)
Needless to say, the focus of India's leadership is to clinch the India-USA Bilateral Trade Agreement. It will not only help India regain its export heft overnight but also set in motion tailwinds that positively impact the stock market, GDP growth rates and possibly even the value of the rupee against the US Dollar.
One of the government's focus areas is the Export Promotion Mission. It envisaged the coming together of the Department of Commerce, Ministry of MSME, Ministry of Finance, Financial Institutions, Export Promotion Councils, Commodity Boards, industry associations and state governments. The ministry describes it as a reform that strengthens India’s global trade framework by leveraging the country's strengths. The mission has a total allocation of Rs 25,060 crore between the years FY26 and FY31.
