India's exports set to cross $1 trillion in FY26 on robust global demand, says FIEO

Time of India

2 days ago

India's total goods and services exports are projected to surge over 21% year-on-year to touch $1 trillion in the fiscal year 2025-26, according to the Federation of Indian Export Organisations (
FIEO
). In 2024-25, the country's exports stood at $824.9 billion.
FIEO President S C Ralhan attributed the projected growth to global buyers looking to diversify their sourcing strategies amid ongoing geopolitical and economic uncertainties. 'The free trade agreements, which India is finalising, would also help in pushing the country's outbound shipments,' he noted.
For FY26, merchandise exports are expected to rise by 12% to $525-535 billion, up from $437 billion in FY25. Services exports are projected to grow about 20% year-on-year to $465-475 billion, compared to $387 billion last fiscal, PTI reported.
Ralhan said that all major sectors are likely to witness robust growth, including electronics, engineering, chemicals, textiles and clothing, pharmaceuticals, and agriculture. Petroleum and gems and jewellery exports are also expected to rebound into positive territory.
Export estimates for 2025-26 include $60 billion from electronics and electricals, $40 billion from machinery, $40 billion from chemicals, $30 billion from pharmaceuticals, $70 billion from petroleum products, $23–25 billion from apparel and made-ups, $30–35 billion from gems and jewellery, and $55 billion from agriculture.
A key growth driver for the electronics segment will be the Production Linked Incentive (PLI) scheme. Ralhan also pointed to rising trade diversification as a catalyst, especially with U.S. buyers increasingly looking beyond China.
As evidence of the shift, Apple supplier Foxconn invested $1.48 billion (around Rs 12,800 crore) in its India unit during May 14–19, according to regulatory filings.
'It is not just Apple—many other companies are also looking at India. Trade diversion from China will bring at least an additional $5 billion worth of opportunity,' said Ajay Sahai, Director General and CEO of FIEO.
India's ongoing negotiations for free trade agreements with the UK, the European Free Trade Association (EFTA), and the European Union (EU) are expected to further support export growth. Additionally, an interim trade deal with the U.S., which may exempt India from reciprocal tariffs, could give Indian exporters a competitive edge, Sahai said.
In FY25, the gems and jewellery sector saw exports of $29.8 billion, but the sector has experienced a decline over the past two years due to weakening demand and challenges in sourcing natural diamonds.
While the outlook remains strong, Sahai cautioned about emerging headwinds, particularly from non-tariff and technical barriers. A major upcoming challenge is the EU's implementation of the Digital Product Passport (DPP) from January 1, 2026. Initially covering electronics, batteries, textiles, and construction materials, the regulation is set for broader rollout by 2030.
The DPP will require detailed digital documentation of a product's life cycle—from raw material sourcing to recycling and disposal—which could significantly increase compliance costs, especially for Micro, Small, and Medium Enterprises (MSMEs).
'These are clearly protectionist measures,' Sahai said, warning that failure to comply could lead to shipment rejections or competitiveness loss in the EU market, which is increasingly focused on sustainability.
The DPP follows a series of EU regulations including the Carbon Border Adjustment Mechanism, anti-deforestation rules, and the Eco Design Sustainable Product Regulation, all coming into effect from January 1, 2026.
On a positive note, Sahai mentioned that geopolitical disruptions in key trade routes like the Red Sea have subsided, with shipping operations gradually resuming despite recent conflicts in the Russia-Ukraine and Israel-Hamas regions.