India’s Exports Set to Soar to $1 Trillion Amid Global Trade Shifts

India’s exports are projected to reach $1 trillion this fiscal year, a 21.2% increase from $824.9 billion last year, driven by trade diversification, strategic agreements, and production incentives like the PLI scheme. Sectors including electronics, agriculture, and textiles are poised for growth, with electronics alone expected to hit $60 billion. While trade deals boost competitiveness, challenges such as the EU’s Digital Product Passport and sustainability regulations may increase compliance costs. Despite hurdles, India’s export outlook remains robust and transformative.

India’s export industry is on the cusp of a major breakthrough, with projections indicating that exports will hit an unprecedented $1 trillion in the current financial year. This growth is fueled by a combination of global buyers diversifying their sourcing strategies, favorable trade agreements, and increased production capacity, according to the Federation of Indian Export Organisations (FIEO).

This anticipated milestone represents a 21.2% increase over last year’s total exports of $824.9 billion. Looking ahead to the financial year 2025-26, merchandise exports are predicted to rise by 12%, reaching $525-535 billion, while services exports are expected to grow at an impressive 20% year-on-year, totaling $465-475 billion, FIEO President S.C. Ralhan noted.

If these estimates materialize, it will mark a significant rebound for goods exports, which experienced a contraction of over 3% in FY24 and stagnated in FY25. Services exports, on the other hand, have shown resilience, steadily increasing their contribution to the nation’s overall export portfolio.

Key Sectors Driving Growth

Virtually every major sector is expected to contribute significantly to this growth, with notable surges anticipated in electronics, engineering, chemicals, textiles, pharmaceuticals, and agriculture. Even traditionally volatile sectors like petroleum and gems and jewelry are poised to post positive results.

Electronics exports, in particular, are set to skyrocket, climbing from $44 billion in FY25 to an estimated $60 billion this year. This surge is being driven by production linked incentive (PLI) schemes that have spurred the establishment of new manufacturing units, many of which will commence operations this year. Additionally, global corporations, especially in the U.S., are seeking alternatives to China for sourcing electronics. Apple, for instance, has announced plans to shift the assembly of all iPhones for the U.S. market to India, after sourcing products worth ₹1.5 lakh crore from the country last financial year.

This trend is not limited to Apple alone. Numerous multinational companies are exploring India as a viable alternative to China, creating an additional $5 billion in trade opportunities, according to Ajay Sahai, FIEO’s Director General and CEO.

Boost from Trade Agreements

India’s export ambitions are also being buoyed by a series of strategic trade agreements, including the Bilateral Trade Agreement (BTA) and Free Trade Agreements (FTAs) with the UK, the European Free Trade Association (EFTA), and the European Union (EU). These agreements, combined with an interim trade deal that exempts India from reciprocal tariffs, provide Indian exporters with a competitive edge on the global stage.

The gems and jewelry sector, for instance, is projected to rebound, with exports rising to $32-35 billion this year from $29.8 billion last year. Similarly, petroleum exports, which saw a 25% decline in FY25, are expected to recover, surpassing $70 billion. Other sectors like agriculture, chemicals, textiles, and pharmaceuticals are also poised for growth, with projected export values of $55 billion, $40-45 billion, $23-25 billion, and $30 billion, respectively.

Emerging Challenges

Despite this optimistic outlook, Indian exporters face several challenges, particularly from new regulations in key markets like the EU. One of the most pressing concerns is the upcoming Digital Product Passport (DPP) initiative, set to take effect on January 1, 2026.

The DPP will require detailed digital documentation of a product’s entire life cycle, from raw material sourcing to disposal. Initially targeting electronics, batteries, textiles, and construction materials, the initiative will expand to other sectors by 2030. While the DPP aims to promote sustainability, it is expected to increase compliance costs for Indian exporters, especially Micro, Small, and Medium Enterprises (MSMEs). Non-compliance could result in rejected shipments or reduced competitiveness in the sustainability-focused EU market.

These new regulations come alongside other EU measures, such as the carbon tax, deforestation regulations, and the Eco Design Sustainable Product Regulation, all of which are slated to come into force on January 1, 2026.

India’s export sector is entering a transformative phase, driven by a confluence of global trade shifts, government incentives, and strategic partnerships. While challenges like the DPP and other regulatory hurdles loom on the horizon, the overall outlook remains robust. With the groundwork laid for sustained growth, India is well-positioned to cement its status as a global export powerhouse.