India is poised to achieve a significant milestone in its trade history, with total exports of goods and services projected to exceed $1 trillion in the fiscal year 2025-26 (FY26), according to the Federation of Indian Export Organisations (FIEO). This represents a substantial increase from the $825 billion recorded in FY25, marking a growth of over 21% year-on-year .
Key Drivers Behind the Export Surge
1. Sectoral Growth:
- Merchandise Exports: Expected to rise from $437 billion in FY25 to between $525 and $535 billion in FY26.
- Services Exports: Anticipated to grow from $387 billion to approximately $465–$475 billion .
2. High-Performing Sectors:
- Electronics: Projected to reach $60 billion.
- Machinery and Chemicals: Each expected to contribute around $40 billion.
- Pharmaceuticals: Estimated at $30 billion.
- Petroleum Products: Foreseen to add $70 billion.
- Apparel and Made-ups: Anticipated between $23–$25 billion.
- Gems and Jewellery: Projected at $30–$35 billion.
- Agriculture: Expected to contribute $55 billion .
Contributing Factors to Export Growth
1. Trade Agreements:
The implementation of new trade agreements with key partners, including the UK, EU, and EFTA, is expected to enhance market access and reduce trade barriers, facilitating increased export volumes .
2. Resumption of Red Sea Route:
The gradual resumption of Indian export consignments via the Red Sea route is anticipated to streamline logistics and reduce shipping times, thereby boosting export efficiency .
3. Diversification of Sourcing:
Global buyers, particularly from the US, are increasingly seeking to diversify their sourcing strategies, moving beyond traditional suppliers. This shift presents an opportunity for Indian exporters to capture new markets and expand their global footprint .
Challenges and Considerations
While the export outlook is optimistic, certain challenges remain:
- Regulatory Compliance: The upcoming implementation of the European Union’s Digital Product Passport (DPP) from January 2026 may pose compliance challenges, especially for Micro, Small, and Medium Enterprises (MSMEs) .
- Technical and Non-Tariff Barriers: Exporters may face technical standards and non-tariff barriers in various markets, necessitating strategic planning and adaptability.The Indian Express
Conclusion
India’s projected achievement of $1 trillion in exports by FY26 underscores the country’s growing prominence in global trade. The combination of sectoral growth, strategic trade agreements, and improved logistics positions India to capitalize on emerging opportunities. However, addressing regulatory and compliance challenges will be crucial to sustaining this upward trajectory.
