India's overall merchandise exports for FY26 are likely to decline by 2-3% or more, exporters fear. Due to the ongoing West Asia crisis, there has been a significant fall in merchandise exports in March, which is expected to pull down the overall export figures. With exports weakening, some exporters warn of a potential capital crunch if the conflict does not subside within a few weeks.
“Due to logistical challenges and uncertainty in key trade routes, India’s exports in March will be lower. Overall merchandise exports could decline by 2-3% due to the crisis in West Asia,” said Federation of Indian Export Organisations (FIEO) President SC Ralhan.
Exporters across sectors such as textiles, auto parts and electrical goods have flagged concerns over a liquidity crunch due to declining exports. Labour-intensive and tariff-hit sectors such as textiles and apparel have been the worst hit, and their overall export figures could fall in double digits in the current financial year.
Sanjoo Tandon, Vice-President (International Business) at Eastman, an exporter of forging, machining and casting parts, said: “We had significant exposure to West Asia. Nearly 10% of our exports go to Dubai. With shipment delays, cash liquidity will be impacted.” According to him, exports declined by 7–10% in March alone.
Despite the gloomy outlook, Ralhan said strong services exports could cushion weak merchandise shipments and keep India’s overall exports in positive territory. A brief ceasefire may offer short-term relief, allowing cargo to reach West Asia within week-long transit times. However, he cautioned that the situation remains fragile and advised exporters against taking fresh risks.
India's merchandise exports during FY2024-25 (April–March) stood at $437.42 billion, while exports during April–February of FY2026 reached $402.93 billion.
The government has introduced several measures to support exporters, including the launch of the Resilience & Logistics Intervention for Export Facilitation (RELIEF) scheme (approximately ₹497 crore), specifically aimed at MSME exporters. It has also restored the RoDTEP (Remission of Duties and Taxes on Exported Products) benefits for 2025–26 and extended the scheme until September 2026.