India’s goods and services exports set a new record, reaching $821 billion in 2024-25 compared to $778 billion the year before. But if you look closely, the growth is not broad-based—instead, it was a game of two halves, with services outperforming goods exports. If merchandise exports stayed flat at a growth of just 0.08 percent (on a low base, as goods exports slowed by 3.1 percent in 2023-24), services exports shot up 12.45 percent, making up for the muted performance of the other half. Interestingly, merchandise shipments in March exceeded the performance of the previous 11 months in absolute numbers, thanks to higher engineering and electronics exports amid the tariff war. Indian exports to the US surged 35 percent in March, as businesses scrambled to dispatch goods, with some even frantically airlifting shipments ahead of the April 2 deadline for the US’s reciprocal tariffs to kick in.
Official data released this week also showed that other merchandise exports made up for a 25 percent drop in petroleum products exports, largely due to lower crude oil prices. On the other hand, the total imports stood at $915 billion, driven in part by more gold imports. On the balance, amid rising geopolitical tensions and trade disruptions, Indian exports exhibited resilience. Particularly so for smartphone exports, which in 2024-25 emerged as India’s largest individual export commodity by value for the first time. Though the growth was partly due to a rush in exports before the tariff deadline, there is also scope to increase the value of exports in sectors such as agriculture, electronics, automobiles, energy, textiles and alcohol.
The government should make concerted efforts to widen its geographic footprint beyond its top five goods export destinations—the US, the UAE, the Netherlands, the UK and China. As for the US, we should step up negotiations and may consider lowering tariffs on imports that aid domestic producers. Lower tariffs have indeed been helpful in the past. An IMF study showed that a 10 percent reduction in tariffs resulted in a 0.5 percent increase in firm productivity during India’s trade reforms in the 1990s. Above all, to sustain our export momentum, the government should also consider enhancing export competitiveness, diversifying products and markets, addressing logistics and infrastructure gaps, easing regulatory burden and improving access to bank credit.