Whalesbook
April Exports Show Early Strength Despite Global Turmoil
India's goods exports grew in early April, showing resilience even with the West Asia crisis. Commerce Minister Piyush Goyal indicated significant increases in early April shipments compared to last year. Growth is credited to new Free Trade Agreements (FTAs) and ongoing talks for approximately a dozen more. These pacts aim for better market access and protection against rising global protectionism and instability. For the full fiscal year 2025-26, total exports (goods and services) reached $860.09 billion, a 4.22% increase. Merchandise exports saw a more modest 0.93% rise to $441.78 billion, while services exports continued their strong performance, reaching $418.31 billion.
FTAs and Government Push Fuel Export Growth
The government is expanding its FTA network, with recent deals with the UK, EU, UAE, Australia, Oman, and New Zealand, plus ongoing talks with Peru, Chile, Canada, Qatar, and Saudi Arabia. These agreements are vital to counter increasing global protectionism. The Export Promotion Mission (EPM), backed by ₹25,060 crore through FY 2030-31, consolidates export support. EPM aims to boost competitiveness for MSMEs, new exporters, and labor-intensive sectors by improving trade finance access and market readiness. MSMEs, accounting for 45.73% of India's exports, are a key focus. Their exports tripled to ₹12 lakh crore in FY 2024-25. Agricultural exports grew 8.8% in the first half of FY25-26, supported by policy and demand.
Costs Soar and Trade Deficit Widens Amid Shipping Crisis
However, significant vulnerabilities lie beneath the growth figures. The West Asia crisis has severely disrupted global shipping, cutting capacity on key routes to Europe and North America by about 30-35%. This means longer journeys, freight costs potentially tripling or quadrupling, and emergency surcharges that hurt profits. Around 40,000-45,000 containers of Indian exports are stranded. For items like basmati rice, freight costs surged nearly 100% and insurance premiums rose 1000%. These disruptions contributed to a 7.6% year-on-year fall in goods exports to $38.92 billion in March 2026. The overall trade deficit grew to $119.30 billion in FY 2025-26, as imports outpaced exports. The Indian Rupee has also depreciated significantly, weakening by 12.17% over the past 12 months and reaching a record high against the USD in March 2026, making imports more expensive. The goal of $2 trillion in exports by 2030-31 has been revised, with Minister Goyal now projecting its achievement around 2032, citing pandemic setbacks and global trading instability. Rising global protectionism further complicates market access and competition.
Outlook: Balancing Growth with Geopolitical Risks
India's export sector faces a crucial period. While FTAs and the Export Promotion Mission offer a growth framework, the immediate future depends on managing geopolitical risks and high shipping costs. Diversification, boosting MSME competitiveness, and infrastructure improvements under EPM will be key. Sustained growth relies on stable trade routes and easing global trade tensions. The revised $2 trillion export target reflects a pragmatic approach to these external challenges.