India’s Export Numbers Look Good. The Reality Doesn’t

The Government of India recently released two data points highlighting India’s strong export performance.A PIB release dated 29 December underscored that India's merchandise exports expanded to $38.13 billion in November 2025 compared to $36.43 billion in January 2025, as part of the government's narrative to claim 2025 as "A Defining Year for India's Growth" and characterise it as "India's Goldilocks Moment."Another press release, on advance GDP, dated 7 January estimates India's exports, current prices, in 2025-26 at Rs 76.62 lakh crore, recording an annual growth of 9.5 percent, higher than the 8.3 percent of 2024-25.In contrast to this claim, a look at other related facts paint a different picture. India’s merchandise exports at $34.4 billion in October 2025, only a month earlier, had contracted by about 12 percent year-on-year. India’s nominal GDP for 2025-26 is estimated at only 8 percent in the same press release. These numbers, along with much slower consumption growth and falling tax growth, are causing enormous anxiety. Is India at a “Goldilocks Moment” or staring at an “economic slowdown”? Will exports grow at a healthy clip or face wreckage on account of US President Donald Trump’s tariffs?India Needs Rs 1 Trillion to Dilute Trump Tariff Hit on Exporters, WorkersOfficial data about India’s exports, imports, and trade balance are available for eight months up to November 2025. Merchandise exports during this period, at $292.07 billion, recorded increase of 2.62 percent, whereas imports at $515.21 billion increased at 5.59 percent, resulting into merchandise trade deficit of $223.14 billion, 9.74 percent higher than the deficit of $203.33 billion a year before.Services exports continued to perform better. At $270.06 billion, services exports recorded better growth of 8.65 percent. Services imports at $135.93 billion, on the other hand, recorded smaller growth of only 2.81 percent. Consequently, services trade generated good surplus of $134.13 billion.The total trade deficit increased. Total exports of $562.13 billion and imports of $651.13 billion resulted in a trade deficit of $89.01 billion in 2025–26, 2.33 percent higher than $86.98 billion in 2024-25. India’s exports and trade performance in first eight months is not bad, though it is hardly a Goldilocks moment.The National Statistics Office (NSO) projects exports to grow at 9.5 percent in 2025-26 in nominal rupee terms against export growth of 5.43 percent in US dollar terms in the first eight months, and imports to grow at 9 percent against the US dollar growth of 5 percent. As the NSO had actual exports and imports data in US dollars for eight months, its 2025-26 rupee growth estimates appear to be based on two assumptions: Rupee depreciation against the US dollarEstimated exports and imports in the remaining four monthsThe Indian rupee depreciated by about 6 percent in 2025 against the US dollar: the average depreciation was somewhat lower. Despite prospects of some further depreciation, the NSO seems to have assumed 5 percent rupee depreciation for 2025-26 as a whole. At 5 percent depreciation, the NSO’s assumed annual growth of exports and imports works out to be 4.5 percent and 4 percent, respectively. This seems somewhat unrealistic for three principal reasons. First, the full effect of the contraction in US exports has only begun to be felt since October. There are enough indications that this will accelerate. The US trade deficit declined to a record low of $29.4 billion in October, with imports compressing by more than 3 percent. Indian companies are struggling to secure orders for the next summer session on account of 50 percent tariff and threat of the tariffs going up further. In view of all this, there is every likelihood that India’s exports to the US are likely to decline substantially in the last four months, despite larger iPhone exports. This will most certainly reverse growth of 11.4 percent in exports to the US in first eight months. Second, India has not been able to crack up other markets. While exports to the UAE are up by 6.7 percent, there is a serious decline in exports to the Netherlands (minus 21.9 percent), the UK (minus 7 percent), Singapore (minus 23 percent), Saudi Arabia (minus 7.6 percent), Australia (minus 12.9 percent), South Africa (minus 8.1 percent) and France (minus 10.65 percent), despite India having free trade agreements (FTAs) with most of these countries. Positive export growth to Bangladesh is also likely to turn negative in view of recent tensions and bans. Third, India does not have any clinching industrial product(s), which the world has to necessary buy. It is not a significant participant in global value chains for traditional industrial goods either. Its biggest weakness lies in new industrial goods (such as solar wafers and cells, electronics, chips and electric vehicles), which are witnessing strong global export growth. India is largely absent in this space.India’s services exports are heavily dependent on information technology (IT) services (more than 60 percent of total service exports). A welcome structural change is taking place in services, with global capability centres (GCCs) exports picking up fast, despite artificial intelligence, auto-programming, and IT capabilities rising all over the world.India, however, has not been able to get its act together in other services exports such as travel, education, etc. Its excessive dependence on the US for services exports also remains a major risk.Overall, India’s services exports are expected to perform well for some years unless the Trump administration enacts the Halting International Relocation of Employment (HIRE) Act.Taking all these factors into account, I would peg India's 2025-26 rupee export growth at about 6.5 percent to 7 percent, largely driven by rupee depreciation rather than a great performance.Back to Stagnancy? Modi Govt Has Performed Poorly on the Goods Export Front Why do countries and businesses export or value exports so much?It is primarily to earn additional—and usually higher—profits over their domestic sales. Businessmen’s profit margins from exports are higher as governments typically exempt all exports from domestic product taxes (such as GST and import duties) and, in many cases, from income tax. Governments also subsidise capital investment in export-oriented industries and provide interest subventions, further boosting profitability.Trump’s 50 percent tariffs have made businessmen’s profits disappear from India’s exports. While many businessmen have tried to use third country routes or jurisdictions, which have lower US tariffs, to save their exports, this is not entirely risk-free as such indirect exports are not legit. In addition, they incur extra costs and cede profits to third parties. Many exporters are now incurring losses simply to retain their markets.A glut of exportable goods from China and other East Asian countries has intensified competition in global markets, further eating away the margins of Indian exporters.The profitability situation is indeed quite dire. If it persists for long, many businessmen may stop exporting altogether.India’s current export performance is by no means a Goldilocks moment. Neither is it a gridlock. It is quite mediocre and is bound to leave some scars. (Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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India’s Export Numbers Look Good. The Reality Doesn’t

India’s current export performance is by no means a goldilocks moment. Neither is it a gridlock.

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