Trade pacts, Red Sea route resumption to aid India's FY26 exports to $1 trn: FIEO

Time of India

4 days ago

India anticipates its goods and services exports to hit $1 trillion by fiscal year 2026. This growth is supported by new trade agreements and the resumption of shipments via the Red Sea route. Federation of Indian Export Organisations projects increases in merchandise and service exports. Key sectors driving this growth include electronics, agriculture, and petroleum products.
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New Delhi: India's overall goods and services exports are expected to reach $1 trillion in FY26 aided by more trade agreements with key trade partners coming into force amid Indian export consignments having gradually started moving through the Red Sea route again, Federation of Indian Export Organisations ( FIEO ) said Tuesday.In 2024-25, India's exports were $825 billion. FIEO President S C Ralhan said that merchandise exports will increase to $525-535 billion this fiscal from $437 billion, led by electronics, agriculture and petroleum products while services exports are seen rising to $465-475 billion from $387 billion.Another factor will be the foreign buyers particularly in the US looking beyond China to source their goods.The main sectors which can help push the exports include electrical and electronics $60 billion, machinery at $40 billion, chemicals at $40 billion, pharmaceuticals $ 30 billion, petroleum $70 billion and agriculture at $55 billion, among others.Trade pacts with the US, EU, UK and EFTA will aid the efforts, said FIEO Director General Ajay Sahai, adding that the interim trade deal that exempts India from reciprocal tariffs would offer a big advantage over competitors.Sahai also said that consignments are gradually going through this important sea route.'It will cut transportation time,' he said, adding that freight rates have stabilised because of a drop in ship demands from China.The gradual movement signals a cautious recovery in shipments after months of disruptions on the route caused by regional tensions. Around 80% of India's merchandise trade with Europe passes through the Red Sea and substantial trade with the US also takes this route.Last year, the situation around the Bab-el-Mandeb Strait , a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, escalated due to attacks by Yemen-based Houthi militants. Due to the attacks, the shippers were taking consignments through the Cape of Good Hope, encircling the African continent, resulting in delays of almost 14-20 days and higher freight and insurance costs.The apex trade body said that despite the healthy outlook, some headwinds are expected to come from technical and non-tariff barriers. The latest one facing the industry is the implementation of Digital Product Passport (DPP) that is to be implemented by the EU from January 1, 2026 which aims to digitally record, store, and share information about a product's entire life cycle—from raw materials to manufacturing, usage, recycling, and disposal. It will be mandatory for a wide range of products including electronics, batteries, textiles, and construction materials.