India sees $52.3 bn services surplus in Q3 FY25; offsets goods deficit

Business Standard

3 days ago

India recorded a services trade surplus of $52.3 billion in the third quarter (Q3) of the financial year 2024-25 (FY25), driven by a 17 per cent rise in services exports driven by information technology, consulting, and R&D services. This strong trajectory in the October-December 2024 quarter helped cushion a growing merchandise trade deficit. These are among the key findings of the third edition of 'Trade Watch Quarterly', released by NITI Aayog on Monday. Merchandise trade gap widens During the same period, India's merchandise exports rose by 3 per cent to $108.7 billion, while imports jumped 6.5 per cent to $187.5 billion, the report found. The widening goods trade gap was offset significantly by robust services performance, reinforcing India's growing competitiveness in the global services economy. ALSO READ: Chhattisgarh govt gives a breather to small traders, waives VAT dues Key trade highlights from Q3 FY25 The publication also highlighted key trends during this period: * Digitally Delivered Services (DDS) exports reached $269 billion in 2024, making India the world's fifth-largest exporter in this segment. * Exports of aircraft, spacecraft and parts entered the top 10 export categories, growing by over 200 per cent year-on-year on increased demand from Saudi Arabia, UAE, and the Czech Republic. * High-tech merchandise exports, in electrical machinery and arms/ammunition, have grown at a 10.6 per cent compound annual growth rate (CAGR) since 2014, reaching $80.6 billion in 2024 ALSO READ: Rupee drops as traders await CPI print; ends near 86 mark on tariff fears India's tariff advantage in US trade On trade with the United States, the NITI Aayog report noted that while the government was still engaged in bilateral talks with the Trump administration, India currently enjoys a tariff advantage over major competitors. This has been observed in key sectors like pharmaceuticals, textiles, and electrical machinery. 'The realignment of global trade requires agile policymaking,' said Arvind Virmani, member of NITI Aayog. 'India's trade strategy is increasingly driven by competitiveness, innovation, and a focus on key global markets like the United States.' The report mentions that India is well-positioned to capitalise on the realignment. For example, India stands to gain a tariff edge over China, Mexico, and Canada in nuclear reactors, iron and steel, textiles, electricals and vehicles, the report said. ALSO READ: India's oil imports from Russia hit 11-month high in June amid war fearsRise in Indian exports, FTA fuels growth Exports to ASEAN, West Africa, and South Asia saw significant year-on-year growth, with Singapore alone accounting for a 52 per cent rise, largely due to higher petroleum and cargo vessel shipments. Overall, North America and the EU continued to anchor 40 per cent of India's exports. Trade with Free Trade Agreement (FTA) partners also recorded robust growth. Exports to these countries rose 16 per cent year-on-year to $43.2 billion, while imports increased 7 per cent to $66.7 billion. Notably, Mauritius saw an 800 per cent surge in imports owing to offshore drilling platform purchases Future trade outlook for India To leverage trade tailwinds, the report recommended several policy actions, such as: * Expanding PLI schemes to labour-intensive sectors * Fast-tracking FTAs, especially with the EU and the US * Enhancing export credit access for MSMEs * Building digital-ready customs and trade infrastructure. The report also recommended negotiating services-oriented FTAs, particularly with the US, that would cover data flows and professional mobility.