April 18, 2025
Imports from China surged to a record US$113.45 billion, widening the trade deficit with China to US$99.2 billion
Total goods exports remained flat at US$437.42 billion, while services exports grew 12.45% to US$383.51 billion
Coffee and electronics led the export growth, rising 40% and 32% respectively
Engineering exports grew 6.74% in FY25 but declined 4% in March due to emerging US duties
India’s exports to the United States reached a record US$86.51 billion in FY25, buoyed by a surge in March as exporters rushed to ship goods ahead of anticipated reciprocal tariffs starting April 2. According to provisional data released by the Commerce Ministry, exports to the US crossed US$10 billion in March alone, up 35% year-on-year.
Meanwhile, imports from China surged 25% in March, pushing total imports from Beijing to an all-time high of US$113.45 billion in FY25. This has widened India’s trade deficit with China to US$99.2 billion, a figure that experts say reflects not just trade imbalance but India’s structural dependence on Chinese supply chains.
Ajay Srivastava, former trade officer and head of the Global Trade Research Initiative (GTRI), warned, “China is India’s top supplier in all eight major industrial categories. The PLI schemes are inadvertently driving up imports due to the reliance on foreign components. More concerning is the 14.5% fall in Indian exports to China, now down to US$14.2 billion — lower than FY14 levels despite a weaker rupee, which signals a competitiveness crisis.”
Despite healthy performance in some sectors, India’s exports of goods were flat at US$437.42 billion in FY25, marginally up from US$437.07 billion in FY24. In contrast, services exports grew 12.45% to US$383.51 billion, helping India maintain a robust surplus in services trade, with imports at US$195.95 billion.
The boom in coffee exports stood out, with a 40% jump to US$1.8 billion, thanks to drought-driven shortages in Brazil and soaring global prices for robusta beans. Similarly, electronics exports rose 32% to US$38 billion, propelled by iPhone manufacturing and assembly in India.
Exports of drugs and pharmaceuticals, fruits and vegetables, and processed cereals also recorded healthy growth of 5-10%. However, sectors such as gems and jewellery, handicrafts, and chemicals saw up to 10% declines.
Engineering goods, traditionally a strong contributor to exports, grew 6.74% in FY25, but saw a 4% year-on-year drop in March to US$10.82 billion. Engineering Export Promotion Council chairman Pankaj Chadha warned of further setbacks due to new US steel and auto components duties, estimating a US$4-5 billion hit annually. He also flagged rising competition from China in key markets like Latin America, Africa, and the Middle East, which could compress profit margins and investment potential for Indian exporters.
The overall trade deficit for the fiscal year widened to US$94.26 billion, as imports rose 7% to a record US$915.19 billion.
Global prospects also remain clouded. The World Trade Organization (WTO) forecasted a 0.2% contraction in global merchandise trade volume in 2025, nearly three percentage points below a low-tariff scenario. WTO Director-General Ngozi Okonjo-Iweala cautioned that although some de-escalation in tariff tensions had eased pressure, persistent uncertainty could weigh heavily on global trade and disproportionately affect vulnerable economies.
With tariff tensions, structural dependencies, and geopolitical uncertainty all looming large, Indian exporters face a complex and volatile trade landscape ahead.
Source: Indian Express