India's merchandise exports are forecast to grow by 17.6% year-on-year to $131.2 billion in the July-September quarter. While this outlook reflects strong trade momentum, investors should track the widening trade deficit, as recent data indicates import growth is currently outpacing exports.
India’s merchandise exports are poised for a significant expansion in the second quarter of fiscal year 2027, with projections indicating a rise to $131.2 billion. This estimate represents a 17.6% increase compared to the same period last year, according to the latest forecast from the Export-Import Bank of India. The institution utilizes its proprietary Export Leading Index, a model reviewed by technical experts from bodies including the Reserve Bank of India, to generate these quarterly outlooks.
The growth momentum is expected to be led by the non-oil export segment. Projections show these shipments climbing 20.3% to reach $113.8 billion. Furthermore, exports excluding oil, gems, and jewellery are anticipated to grow by 20.5% to $105.8 billion. These forecasts suggest that despite global economic uncertainties, certain sectors are maintaining steady demand and expanding their market reach.
While the outlook for exports is positive, the broader economic picture requires close attention from market participants. Data from the first quarter of fiscal year 2027 revealed that while exports hit a record $129.6 billion with 16.1% growth, imports expanded at a faster pace of 19.89%, reaching $216.18 billion. This trend has led to a widening trade deficit, which can place pressure on currency stability and overall macroeconomic balance.
The Export-Import Bank of India has identified potential risks that could affect these projections. Geopolitical conflicts and volatility in international commodity markets, particularly crude oil, remain significant threats to trade performance. Any sudden rise in global commodity prices or shifts in trade policies could impact the cost of imports and dampen export competitiveness.
Going forward, the key factor for investors to monitor will be the balance between export performance and the rising import bill. While the current projections for the July-September quarter signal resilience in the manufacturing and trade sectors, the sustainability of this growth will depend on whether global demand persists and whether the trade deficit remains manageable against the backdrop of fluctuating import costs.