April 21, 2025
Services exports emerged as the key growth driver, rising by 12.45% to US$383.51 billion
Merchandise exports remained flat at US$437.42 billion, while imports climbed by 6.2% to US$720.24 billion
The trade deficit widened by over 20%, from US$78.39 billion to US$94.26 billion in FY25
The US-imposed 10% tariff on Indian goods has been suspended for 90 days
India reported a record US$821 billion in total exports for the financial year 2024–25, buoyed by robust services exports despite subdued growth in merchandise shipments and mounting global trade uncertainties. Commerce Secretary Sunil Barthwal stated that the services export estimate for March is conservative, and the final export figures for FY25 could surpass the provisional numbers.
As per government data, India’s combined exports of goods and services stood at US$820.93 billion in FY25, up from US$778.13 billion in FY24—a 5.5% year-on-year increase. However, imports rose more sharply by 6.85% to US$915.19 billion, widening the trade deficit to US$94.26 billion from US$78.39 billion in the previous year.
While merchandise exports showed negligible growth, rising marginally to US$437.42 billion from US$437.07 billion, services exports surged to US$383.51 billion from US$341.06 billion, registering a 12.45% jump. Services imports also increased by 9.33% to US$194.95 billion.
For March 2025, the data indicated that merchandise exports edged up by just 0.67% to US$41.97 billion, whereas imports increased by 11.36% to US$63.51 billion. The resulting monthly trade deficit was US$21.54 billion.
The commerce ministry attributed merchandise export performance to strong showings in engineering goods, electronics, pharmaceuticals, ready-made garments, and agricultural products such as rice, cotton, spices, tea, and tobacco. Barthwal credited the government’s targeted strategy—focused on 20 countries, six merchandise sectors, and six services sectors, along with coordinated efforts with export promotion councils, Indian embassies, and ministries—for the resilient performance.
India’s export outlook will depend significantly on finalising bilateral trade agreements, especially with the United States and the European Union. The US, which currently imposes a 10% tariff on Indian goods, had previously threatened a 26% duty before announcing a 90-day suspension of reciprocal tariffs. Barthwal noted that the reciprocal tariffs from the US present both risks and opportunities, and confirmed that negotiations are underway for a mutually beneficial bilateral trade agreement, targeted for completion by September or October 2025.
Given the intensity of current negotiations, an official familiar with the matter suggested that discussions with the US could wrap up sooner. India and the EU are also reportedly exploring the possibility of an early harvest agreement—an initial step toward a broader free trade agreement (FTA), similar to India’s 2022 arrangement with Australia. A full FTA with the United Kingdom is also nearing finalisation.
In the context of escalating tariff wars between the US and China, marked by Washington’s 145% tariff and Beijing’s 125% countermeasure, India is seen as a potential beneficiary, with opportunities to fill supply chain gaps left by China.
ICRA’s Chief Economist Aditi Nayar noted that merchandise export data did not reflect a front-loading of shipments ahead of the proposed US tariffs, resulting in a larger-than-expected trade deficit. Meanwhile, FIEO President SC Ralhan called for strategic government support to maintain export momentum amid volatile global trade conditions.
Source: Hindustan Times