India’s global trade ambitions are on an impressive upward path, with total exports projected to surpass $1 trillion in FY2025-26, marking a significant leap from the $824.9 billion recorded in FY2024-25. This growth forecast of over 21% year-on-year reflects robust performance across both merchandise and services sectors, along with structural shifts in global sourcing patterns and trade policies.

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Export Forecast: FY2024-25 vs FY2025-26

Category	FY2024-25 Estimate	FY2025-26 Projection	Growth Rate
Total Exports	$824.9 billion	$1 trillion	21.2%
Merchandise Exports	$508–518 billion	$525–535 billion	3.3%–5.3%
Services Exports	$316–326 billion	$465–475 billion	42%–47%

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Key Export Sectors Driving Growth

Sector	Projected Contribution in FY2025-26	Key Growth Drivers
Electronics	~$60 billion	PLI schemes, diversification from China
Agriculture	~$55 billion	Growing global demand, improved logistics
Chemicals	~$40 billion	Cost competitiveness, innovation
Pharmaceuticals	~$40 billion	Trusted supply chains, generics demand
Textiles & Clothing	High growth expected	FTA access, shift from traditional suppliers
Engineering Goods	Significant contributor	High-value manufacturing exports
Petroleum & Gems	Traditional export strengths	Global commodity demand

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Macro Drivers Fueling Export Momentum

1. Global Diversification Strategy

Amid rising geopolitical tensions and supply chain shocks, international buyers are reducing over-dependence on traditional manufacturing hubs like China. India, with its scale, policy incentives, and growing infrastructure, is emerging as a preferred alternative.

2. Free Trade Agreements (FTAs)

Ongoing negotiations with the UK, European Union, and EFTA, coupled with a potential interim trade agreement with the U.S., are expected to reduce tariff and non-tariff barriers, making Indian goods more competitive.

3. Investment Inflows

Manufacturing giants such as Foxconn are investing heavily in Indian facilities, boosting domestic production capacity and technology transfer, particularly in electronics and semiconductors.

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Challenges and Compliance Pressures

Despite the positive outlook, India faces several headwinds that could impact its trajectory:

Challenge	Details
Non-Tariff Barriers	EU’s Digital Product Passport (DPP) to take effect from Jan 1, 2026
Compliance Costs for MSMEs	New sustainability and documentation requirements could increase costs
Regulatory Hurdles	Stringent norms in the EU and U.S. on environment, labor, and quality
Risk of Shipment Rejections	Non-compliance could result in bans or rejected consignments

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Strategic Drivers of Long-Term Export Growth

India’s export performance is underpinned by a broad mix of economic, structural, and policy-level drivers:

Driver	Impact
Global Demand Trends	Higher international consumption of electronics, pharma, and agri products
Currency Exchange Rates	Favorable INR rates improve price competitiveness
Infrastructure Development	Better ports, logistics, and SEZs boost supply chain efficiency
Government Incentives	Export subsidies, PLI schemes, and fast-track customs clearance
Technological Advancement	Automation and e-commerce expansion aid cross-border trade
Market Diversification	Reduced dependency on single geographies (e.g., U.S., EU)

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Conclusion: A $1 Trillion Target Within Reach

India’s export engine is primed for accelerated growth. With strong policy support, sectoral performance, and a favorable global trade climate, the $1 trillion export milestone in FY2025-26 appears within striking distance. However, sustainability compliance, infrastructure readiness, and MSME preparedness will play a pivotal role in determining whether this ambitious target becomes a reality.

As India positions itself as a global manufacturing and services powerhouse, sustained reforms, strategic trade partnerships, and robust execution on the ground will be key to unlocking its full export potential.