India Trade 2025: Services & Exports Drive Growth Amid Global Challenges

India’s trade performance gained steady ground in the fourth quarter of FY2024-25, with robust services and niche exports driving growth despite a turbulent global environment. The latest “Trade Watch Quarterly”, released by B.V.R. Subrahmanyam, CEO of NITI Aayog, highlights India’s trade resilience and the rising contribution of high-value manufacturing and digital services.

The quarterly report offers a comprehensive assessment of merchandise and services trade trends, global demand shifts, and emerging export opportunities. It underscores the need to diversify markets and expand India’s presence in high-demand sectors to sustain growth momentum.

Resilient Trade Performance Amid Challenges

During January–March 2025, India’s total trade reached USD 441 billion, marking a 2.2% increase compared to the same period last year. Merchandise exports showed a slight contraction, primarily due to lower shipments of mineral fuels and organic chemicals. However, exports of electrical machinery, pharmaceuticals, and cereals registered healthy gains.

Imports rose marginally as demand strengthened for nuclear reactors, electrical machinery, and inorganic chemicals. Among regions, North America emerged as India’s fastest-growing export market, expanding by 25% and accounting for nearly one-fourth of India’s total exports. In contrast, exports to the EU, GCC, and ASEAN showed moderation. On the import side, the UAE overtook Russia as India’s second-largest supplier, buoyed by gold inflows under CEPA, while imports from China surged on the back of strong electronics demand.

Leather and Footwear Sector in Focus

This quarter’s report spotlights the leather and footwear industry, a sector that employs 4.4 million people and continues to play a vital role in India’s export ecosystem. While India commands a 10–14% global share in processed leather exports, its presence in the USD 296 billion global footwear market remains modest at just 1.8%.

With global demand shifting rapidly toward sustainable, non-leather products, India faces both challenges and new opportunities. The report emphasizes the importance of empowering MSMEs, boosting R&D, and aligning with green, design-driven value chains to enhance the country’s competitiveness in this evolving market.

Trade Snapshot: Growth Driven by Services

For FY2024-25, India’s total trade stood at USD 1.73 trillion, including exports worth USD 823 billion and imports of USD 908 billion. The trade deficit narrowed to USD 51.4 billion, the lowest among the four quarters of the fiscal year.

Merchandise exports reached USD 115 billion, a 4% year-on-year decline, while imports grew 1.8% to USD 175 billion. The real momentum came from services exports, which surged 14% to USD 102 billion, led by telecom, IT, and business services.

The findings signal a structural transformation in India’s trade composition — shifting from traditional goods toward digitally delivered, high-value services — reinforcing India’s position as a global services hub. Economists see this trend as a positive sign for GDP growth in FY2025-26.

Leadership Remarks and Policy Vision

Speaking at the release, B.V.R. Subrahmanyam, CEO of NITI Aayog, lauded the team behind the report for capturing India’s evolving trade dynamics. He noted that services exports, aerospace, and high-value manufacturing are driving India’s trade resilience and shaping its future competitiveness.

“India must adapt quickly to evolving demand patterns, diversify its export base, and enhance competitiveness in non-leather footwear and global value chains, while closely monitoring geopolitical shifts in trade,”
said Subrahmanyam.

He added that while India’s trade deficit remains manageable, strengthening the manufacturing base and reducing sectoral protectionism are essential to sustain long-term competitiveness.

Policy Priorities and Global Engagements

The report outlines several strategic trade priorities for the coming quarters. It notes progress in free trade agreement (FTA) negotiations with the Eurasian Economic Union, the United Kingdom, and the European Union. It also highlights India’s participation in the 10th ASEAN Review Meeting on trade facilitation and stresses the need to address new U.S. tariff adjustments of up to 50%, which could affect manufacturing exports.

According to the analysis, these engagements will be crucial in maintaining India’s export competitiveness, especially as global trade realigns around sustainability, technology, and geopolitics.

Strategic Pathway to Sustained Trade Growth

Trade experts recommend a clear roadmap to consolidate India’s trade-led growth. They emphasize the need to promote technology-based and non-leather exports, backed by targeted incentives and innovation support. Expanding cluster-based manufacturing could lower MSME production costs by as much as 40%, while greater investments in branding, research, and sustainable production would help capture higher value in global markets.

Leveraging free trade agreements for tariff advantages and deeper market access will further strengthen India’s global presence. With services exports surging and manufacturing reforms underway, India is well-positioned to translate its trade resilience into sustainable economic growth and global competitiveness in FY2025-26 and beyond.