India’s exports show modest growth in Q1; trade deficit narrows

India’s exports grew by 6 per cent in the first quarter of the 2025-26 fiscal year, reaching an estimated $210.31 billion, compared to $198.52 billion during the same period last year, driven largely by robust services export growth. Despite global economic uncertainties and challenges in merchandise exports, services exports surged by 10.93 per cent, helping to reduce India's overall trade deficit by 9.4 per cent to $20.3 billion in Q1.

The export of services was the standout performer in this quarter, with a notable increase of 10.93 per cent, taking the total services exports to $98.13 billion in April-June 2025, up from $88.46 billion during the same period last year. Key sectors such as IT, business services, and software exports contributed significantly to this growth. Electronic goods, which saw a staggering 46.93 per cent rise in exports, were another highlight, bringing in $4.15 billion in June 2025 alone.

In contrast, merchandise exports showed more modest gains. While total merchandise exports for April-June 2025 grew by just 1.92 per cent year-on-year to $112.17 billion, a large portion of this growth came from non-petroleum exports, which rose by 5.97 per cent to $94.77 billion. Key sectors driving merchandise growth included drugs and pharmaceuticals, marine products, and meat, dairy & poultry exports.

Trade deficit narrows as imports stabilise

India’s trade deficit for June 2025 narrowed to $18.78 billion, marking its lowest level in four months. Imports for June 2025 stood at $53.92 billion, a 3.71 per cent decline from the previous year, primarily due to decreased imports of crude oil and gold. Importers also reduced purchases of gold by 25.73 per cent during the quarter, while crude oil imports dropped 8.37 per cent, reflecting lower global oil prices.

Although merchandise imports rose by 4.38 per cent to $230.62 billion in Q1 2025, services imports saw a more moderate rise of 4.9 per cent. The significant decline in the imports of high-value items like gold and petroleum contributed to narrowing the trade deficit, showcasing a balance between robust export performance and controlled import growth.

Sector-specific growth and trade partners

India’s export performance in Q1 was bolstered by electronic goods, with exports growing by 47.1 per cent to $12.4 billion. Other sectors, such as marine products, tea, and tobacco exports, also posted impressive growth rates, underscoring the country’s diversified export base.

The United States remained India’s largest export destination, accounting for $25.5 billion in exports, a 22.1 per cent increase. Other top destinations included the UAE, the Netherlands, China, and the UK. On the imports front, China continued to be the largest source of imports, growing by 16 per cent to $29.7 billion in Q1.

Commerce Secretary Sunil Barthwal expressed confidence that India’s export growth would continue throughout the year, especially with services exports poised for further expansion. However, he emphasised the importance of maintaining a sector-focused strategy, especially in services, to capitalise on India’s growing digital capabilities and skilled workforce.