India's Merchandise Exports Show Growth

India's Export Growth: Key Highlights

1. Merchandise Exports:

   • September exports rose to $44.4 billion, marking a 23% increase.
   • Total exports in the first half of the year reached $259 billion.
   • Exports for 2025-26 stood at $441 billion, showing a marginal increase from $422 billion in 2021-22.

2. Driving Sectors:

   • Engineering and electronic goods led the export growth, with combined exports exceeding $100 billion, representing a 26% increase year-on-year.
   • These sectors account for almost 50% of all non-oil exports.

3. Market Insights:

   • United States: Largest market for Indian exports, with exports rising 48% in September.
   • China: Significantly increased imports from India, accounting for the largest share of India's import basket. Import deficit with China widened to $68.9 billion in April-September, up from $54.4 billion the previous year.

4. Current Account Deficit (CAD):

   • ICRA projects an increase in CAD to $13-15 billion in the second quarter. This is attributed to a modest expansion in the merchandise trade deficit and a dip in invisible earnings.

5. Currency and RBI Interventions:

   • The decline of the Indian Rupee has enhanced export competitiveness, but the Reserve Bank of India (RBI) intervened in foreign exchange markets to curb excessive volatility without targeting specific exchange rates.

6. Government Actions:

   • Continued push for reforms to enhance manufacturing and attract more foreign investment.
   • Efforts to enter into and progress on Free Trade Agreements (FTAs) remain critical to boosting trade.

7. Conclusion:

   • The consistent growth in exports, especially from key sectors, coupled with government initiatives and global market dynamics, reflects India's recovering trade landscape post-pandemic. However, addressing the trade deficit with China and improving relations in the Middle East market remain essential challenges.