Wednesday 23 / July / 2025
New Delhi: India’s trade performance during the first quarter of the financial year 2025–26 reflects a resilient trend amid global economic uncertainty. During the period from April to June 2025, the merchandise exports remained largely stable, services exports surged, and the overall trade deficit narrowed, showcasing India’s ability to adapt and thrive in a dynamic global environment.
In June 2025, India’s merchandise exports stood at USD 35.14 billion as compared with USD 35.16 billion in June 2024, this resilience comes against a backdrop of fluctuating global demand and supply chain constraints. Importantly, 15 of the 30 key export sectors registered positive growth, revealing the inherent strength and diversity of India’s export basket. Electronic goods led the performance showed with an impressive 46.93% growth, followed by traditional sectors like tea (32.64%) and jute including floor coverings (23.44%).
Other significant contributors included meat, dairy & poultry products (19.7%), marine products (13.33%), and processed food items (8.09%). Pharmaceuticals continued their upward momentum with a 5.95% increase, while engineering goods, fruits & vegetables, chemicals, and textiles also posted moderate gains. These sectoral performances highlight India’s gradual transition towards high-value, technology-driven, and processed exports.
On the imports front, India reported merchandise imports worth USD 53.92 billion in June 2025, marking a decline of (-)3.71% compared to USD 56.00 billion in June 2024. This contraction is partly the result of lower demand for commodities, ongoing efforts to promote domestic production, and a softening of global prices. Of the 30 major import categories, 17 registered negative growth. The most significant drop was witnessed in the import of pulses, which plummeted by 74.96%, followed by newsprint (-61.66%), gold (-25.73%), and transport equipment (-20.46%).
Declines in coal and petroleum products also indicated lower energy demand or increased use of alternative sources. Other sectors such as leather goods, iron & steel, non-ferrous metals, and chemicals also saw reduced import volumes. This pattern suggests a cautious yet strategic consumption environment, with possible implications for industrial production and investment trends.
The merchandise trade deficit for June 2025 narrowed to USD (-)18.78 billion from USD (-)20.84 billion a year earlier. This reduction reflects the larger contraction in imports relative to exports, and bodes well for India’s current account management. It also demonstrates the government’s success in fostering self-reliance across key manufacturing and raw material sectors.
While merchandise exports remained steady, the real strength of India’s trade in June 2025 came from the services sector. Services exports stood at USD 32.84 billion, marking a healthy year-on-year growth of 14% over USD 28.67 billion in June 2024. This growth is attributable to India’s global leadership in IT, business process outsourcing, fintech, consulting, and other knowledge-intensive sectors. Services imports, meanwhile, rose by 16.1% to USD 17.58 billion, reflecting increased payment for technical and professional services as Indian firms engaged with international vendors. Despite this, India maintained a robust services trade surplus of USD 15.26 billion, compared to USD 13.53 billion in the same month last year.
Combining merchandise and services, India’s overall trade in June 2025 reached USD 139.48 billion, up from USD 134.97 billion in June 2024. More significantly, the overall trade deficit narrowed sharply from USD (-)7.30 billion in June 2024 to USD (-)3.51 billion in June 2025. This narrowing is a positive signal, suggesting that India’s economy is increasingly able to balance its external engagements by leveraging its competitive strengths in services while managing commodity and capital goods imports judiciously.
A broader view of the April to June 2025 quarter reveals further insights. India’s total exports combining goods and services amounted to USD 210.37 billion, compared to USD 198.52 billion during the same period in 2024, marking a 6% overall growth. Merchandise exports showed a modest rise from USD 110.06 billion to USD 112.17 billion, while services exports surged from USD 88.46 billion to USD 98.13 billion, a testament to India’s continued success in high-skill sectors and digital exports. Meanwhile, total imports also increased, reaching USD 230.62 billion from USD 220.94 billion in the year-ago quarter. This included merchandise imports of USD 179.44 billion and services imports of USD 51.18 billion.
Despite higher imports, India managed to reduce its overall trade deficit to USD (-)20.25 billion in April–June 2025 from USD (-)22.42 billion in the same quarter of 2024. The key driver behind this improvement was the rising surplus in services trade, which expanded to USD 46.95 billion from USD 39.68 billion last year.
The data reveals a shifting composition of both exports and imports. The impressive growth in electronics, pharmaceuticals, and processed foods suggests that India’s production-linked incentive (PLI) schemes and policy push towards value-added manufacturing are beginning to yield results. Services, especially IT and knowledge exports, remain India's crown jewel in foreign trade, providing not just foreign exchange but also strategic economic leverage.
Looking ahead, India’s trade outlook appears promising, driven by emerging opportunities in global supply chain diversification, digital trade expansion, and green transition technologies. With geopolitical shifts prompting many countries to reduce dependence on traditional hubs like China, India is well-positioned to emerge as a preferred alternative for manufacturing and services alike.
The continued implementation of Production-Linked Incentive (PLI) schemes, investments in semiconductor and electronics manufacturing, and digitization of customs and logistics processes are expected to further enhance export competitiveness. Furthermore, the rising global demand for skilled services in AI, cybersecurity, and digital finance offers India a long-term edge.
However, challenges such as volatile commodity prices, trade protectionism, and global economic uncertainty remain. Strategic trade agreements, infrastructure upgrades, and sustained policy focus on ease of doing business will be crucial in ensuring India capitalizes on these future trade possibilities.
In conclusion, the first quarter of FY 2025–26 has set an optimistic tone for India’s foreign trade. Merchandise exports, while not expanding significantly, have shown sectoral depth and stability. Imports have been prudently managed, and the ever-strong services sector continues to power India’s external sector performance. With a narrowing trade deficit, improving export diversity, and growing services surplus, India stands on a firm footing to deepen its integration with the global economy. Strategic policy support, continued investment in digital and manufacturing infrastructure, and targeted export promotion can further enhance India’s trade trajectory in the coming quarters.
