India's Foreign Trade & Trade Composition

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Key Highlights

India’s total exports reached record $820.93 billion in FY 2024-25 with 5.50% growth, comprising $437.42 billion merchandise and $387.50 billion services exports
Electronics sector leads growth with 12.6% expansion reaching $27.8 billion, driven by PLI scheme success and domestic manufacturing boost
Trade deficit improved significantly to $94.26 billion with merchandise deficit at $238.3 billion offset by services surplus of $162.06 billion
Strategic FTA network includes 13 active agreements with UAE CEPA targeting $250 billion bilateral trade by 2030 and Australia ECTA providing comprehensive market access
PLI scheme across 14 sectors transforming manufacturing with textiles turning from net importer to exporter and smartphones achieving 14% global iPhone production in India

India’s foreign trade landscape is experiencing a transformative phase, with total exports reaching $820.93 billion in FY 2024-25, marking a 5.50% growth and representing a 67% increase from $466.22 billion in 2013-14. This remarkable trajectory encompasses both merchandise exports of $437.42 billion and services exports of $387.50 billion, demonstrating India’s evolving position as a global trade powerhouse with diversified export capabilities. The trade composition reveals a strategic shift from traditional raw material exports toward higher-value manufactured goods including engineering products ($116.67 billion), electronics ($27.8 billion with 12.6% growth), and pharmaceuticals ($30.9 billion with 7.5% growth), supported by game-changing Production Linked Incentive (PLI) schemes across 14 critical sectors and strategic Free Trade Agreements with UAE, Australia, and other key partners. With India’s merchandise trade deficit narrowing to $238.3 billion in FY24 from $264.9 billion in FY23 and a services trade surplus of $162.06 billion, the nation is strategically positioned to achieve its ambitious $2 trillion export target by 2030. India’sExports pib.gov

Recent Trade Performance: Growth Trajectory and Sectoral Dynamics

FY 2024-25 Trade Statistics: Record-Breaking Performance

India’s trade performance in FY 2024-25 has demonstrated remarkable resilience despite global economic uncertainties, with cumulative exports reaching historic heights.

Comprehensive Trade Overview (FY 2024-25):

Total Exports: $820.93 billion (5.50% growth)
Merchandise Exports: $437.42 billion
Services Exports: $387.50 billion (12.45% growth)
Total Imports: $915.19 billion
Trade Deficit: $94.26 billion (significant improvement from previous years)
Current Account Deficit: 0.7% of GDP (reduced from 2% in FY23)

Sectoral Growth Champions: Electronics and Pharmaceuticals Lead

India’s Balance of Payments has shown significant improvement, with the Current Account Deficit narrowing dramatically from $67 billion (2% of GDP) in FY23 to $23.2 billion (0.7% of GDP) in FY24.

Balance of Payments Components (FY 2024):

Merchandise Trade Deficit: $238.3 billion (improved from $264.9 billion in FY23)
Services Trade Surplus: $162.06 billion
Capital Account Balance: $86.3 billion net inflows (increased from $58.9 billion in FY23)
Foreign Portfolio Investment: Major driver of capital inflows
Current Account: 0.6% of GDP surplus in Q4 FY24

Services Export Excellence: India’s Competitive Advantage

India’s services sector continues to be a major strength, with services exports at $387.50 billion growing at 12.45% and contributing to a substantial services trade surplus.

Services Export Composition:

IT and Software Services: Dominant contributor with strong global demand
Business Services: Consulting and professional services expansion
Tourism and Travel: Recovery from pandemic impacts
Financial Services: Growing contribution to services exports
India’s Global Services Ranking: 7th largest services exporter globally with 4.3% world share (up from 0.5% in 1993)

Trade Policy Framework: FTAs and Strategic Partnerships

Comprehensive Economic Partnership Agreements

India has strategically expanded its FTA network with 13 active agreements and several new partnerships driving bilateral trade growth and market access expansion. india-briefing

Key Active FTAs and Their Impact:

India-UAE CEPA (2022):

Bilateral Trade Target: $250 billion by 2030
Benefits: $26 billion of Indian products with 5% import duty benefit
GDP Impact: Expected to add $9 billion to UAE GDP by 2030
Sectors Covered: 11 services sectors and 100+ subsectors ibef

India-Australia ECTA (2022):

Mixed Scheduling Approach: India’s first agreement with this comprehensive services framework
MFN Treatment: Australia receives India’s best market access commitments
Growth Potential: Strong complementarity in agriculture, minerals, and services lima

India-Japan CEPA:

Implementation Challenges: Language barriers and regulatory issues limiting services growth
Focus Areas: Pharmaceuticals, automobile components, financial services
Lessons Learned: Importance of addressing non-tariff barriers

Trade Agreement Portfolio Expansion

Comprehensive FTA Network (13 Active Agreements):

Regional: ASEAN, SAFTA (South Asian Free Trade Area)
Bilateral: Singapore, Malaysia, South Korea, Thailand, Sri Lanka, Nepal, Bhutan
Recent Additions: Mauritius (2021), UAE (2022), Australia (2022)
Under Negotiation: UK, EU, Canada

Production Linked Incentive (PLI) Revolution

Manufacturing Transformation Across 14 Sectors

The PLI scheme represents India’s most ambitious industrial policy, with ₹1.97 lakh crore allocation across 14 critical sectors driving domestic manufacturing and export competitiveness.

PLI Sector Performance:

Mobile Manufacturing:

Production Growth: Significant increase in domestic smartphone production
Export Achievement: 14% of global iPhones manufactured in India in FY24
Value Addition: Enhanced domestic component manufacturing

Pharmaceuticals:

Bulk Drug Manufacturing: Transition from net importer to net exporter
Active Pharmaceutical Ingredients: Reduced import dependence
Export Growth: 7.5% growth in pharmaceutical exports

Textiles:

MMF Exports: Rose to ₹525 crore in FY 2024-25 from ₹499 crore in FY 2023-24
Technical Textiles: Exports climbed to ₹294 crore from ₹200 crore
Value Chain Integration: Enhanced domestic manufacturing capabilities

Regional Trade Patterns and Geographic Diversification

Continental Trade Distribution

Q3 FY 2024-25 Geographic Breakdown:

Export Destinations:

Asia: 46.41% of total exports (largest regional market)
America: 22.18% (strong US market performance)
Europe: 20.69% (diversified European engagement)
Others: 10.72% (emerging markets and Africa) gov

Import Sources:

Asia: 61.06% of total imports (primarily China, UAE, Saudi Arabia)
Europe: 14.06% (machinery, chemicals, technology)
America: 10.05% (energy, agricultural products)
Others: 14.83% (diversified sourcing)

Top Trading Partners and Bilateral Relations

Major Trading Partners (Bilateral Trade Volume):

United States: Largest export destination with growing services trade
United Arab Emirates: Strategic gateway to Middle East and Africa
China: Major import source but strategic concerns driving diversification
Saudi Arabia: Key energy supplier and growing bilateral partnership
Singapore: Financial and logistics hub for regional trade

Challenges in Trade Composition

Import Dependence and Strategic Vulnerabilities

Critical Import Dependencies:

Energy Imports: Over 85% crude oil import dependence
Electronics: Significant reliance on Chinese components and technology
Raw Materials: Industrial inputs and intermediate goods
Machinery: Capital goods for manufacturing expansion

Strategic Vulnerabilities:

China Dependence: Critical sectors including pharmaceuticals APIs, electronics
Energy Security: Geopolitical risks in energy supply chains
Currency Fluctuations: Impact on import costs and competitiveness
Supply Chain Disruptions: Global logistics challenges affecting trade flows

Non-Tariff Barriers and Market Access

Export Challenges:

Sanitary and Phytosanitary (SPS) Barriers: Agricultural export restrictions
Technical Barriers to Trade (TBT): Standards compliance costs
Logistics Costs: 13-14% of GDP compared to global average of 8%
Quality Standards: Meeting international certification requirements

Green Trade and Sustainability Concerns

Carbon Border Adjustment Mechanism (CBAM) Impact

EU CBAM Implementation starting 2026 will significantly impact India’s carbon-intensive exports, requiring comprehensive sustainability strategies and carbon footprint reduction.

CBAM Affected Sectors:

Steel and Iron: Major export category facing carbon tariffs
Aluminum: Energy-intensive production processes
Cement: High carbon footprint manufacturing
Chemicals: Process emissions affecting competitiveness
Electricity: Renewable energy transition requirements

India’s Response Strategy:

Renewable Energy Expansion: Solar and wind capacity additions
Carbon Capture Technology: Industrial process improvements
Green Hydrogen: Clean energy transition for heavy industries
Sustainability Certification: International standards compliance

Opportunities and Future Growth Drivers

Emerging Export Opportunities

High-Growth Potential Sectors:

Digital Services:

Software Development: AI, machine learning, and blockchain services
Digital Consulting: Transformation services for global clients
Fintech Solutions: Payment systems and financial technology exports
Telemedicine: Healthcare technology services globally

Green Technology:

Solar Equipment: Manufacturing and export of solar panels and components
Wind Energy: Turbine manufacturing and renewable energy systems
Electric Vehicles: Automotive transition and battery technology
Green Hydrogen: Clean energy technology exports

Pharmaceuticals and Biotechnology:

Biosimilars: Growing global market for generic biologics
API Manufacturing: Active pharmaceutical ingredients production
Medical Devices: Healthcare equipment and diagnostic tools
Vaccines: Global health security demand

Geographic Market Expansion

Emerging Market Focus:

Africa: Growing consumer markets and infrastructure development
Latin America: Pharmaceutical and technology services demand
Southeast Asia: Manufacturing and services partnerships
Middle East: Energy cooperation and technology transfer

Strategic Recommendations for Trade Enhancement

Infrastructure and Logistics Modernization

National Logistics Policy Implementation:

Cost Reduction Target: Logistics costs from 13-14% to 8% of GDP by 2030
PM Gati Shakti Integration: Multimodal connectivity and seamless transport
Port Modernization: Capacity expansion and efficiency improvements
Digital Trade Facilitation: Automated customs and documentation

Manufacturing Competitiveness Enhancement

PLI Scheme Expansion:

Additional Sectors: Defense, aerospace, renewable energy equipment
Scale Enhancement: Increased incentive allocation for strategic sectors
Value Chain Integration: Upstream and downstream industry development
Export Orientation: Manufacturing designed for global markets

Trade Finance and MSME Support

Export Credit Enhancement:

Affordable Financing: Reduced interest rates for export-oriented manufacturing
Credit Guarantee Schemes: Risk mitigation for small and medium exporters
Working Capital Support: Adequate liquidity for export production cycles
Digital Banking: Technology-enabled trade finance solutions

Conclusion: Charting the Path to $2 Trillion Exports

India’s foreign trade composition reflects a strategic transformation from a commodity-dependent economy to a diversified manufacturing and services powerhouse. The remarkable growth in exports to $820.93 billion demonstrates the effectiveness of targeted policy interventions including PLI schemes, strategic FTAs, and infrastructure investments.

The narrowing trade deficit and robust services surplus indicate improving fundamentals, while sectoral growth in electronics, pharmaceuticals, and engineering goods showcases India’s manufacturing capabilities. The comprehensive FTA network provides enhanced market access, while PLI schemes drive domestic value addition and export competitiveness.

Challenges remain significant – from energy import dependence to logistics costs and emerging sustainability requirements like CBAM. However, strategic opportunities in digital services, green technology, and pharmaceutical exports position India for sustained growth.

The path to $2 trillion exports by 2030 requires continued focus on manufacturing excellence, infrastructure development, trade facilitation, and strategic partnerships. Success will depend on maintaining export momentum while addressing structural challenges and capitalizing on emerging opportunities in the evolving global trade landscape.

India’s trade composition evolution from traditional exports to high-value manufacturing and services excellence demonstrates the nation’s capacity for economic transformation. With supportive policies, strategic investments, and global partnerships, India is well-positioned to achieve its ambitious export targets and strengthen its position as a major global trading power.