Introduction
India’s external trade performance in December 2025 presented a mixed outcome. Merchandise exports climbed 1.9% year-on-year to USD 38.51 billion, up from USD 37.8 billion in December 2024, reflecting steady demand across several sectors. However, imports surged by 8.7% to USD 63.55 billion, leading to a wider trade deficit of USD 25.04 billion. Although export growth remained modest, the figures underscore India’s resilience in maintaining momentum amid global challenges such as geopolitical tensions, supply chain disruptions, and evolving trade barriers.
Export Performance: Sectoral Highlights
The growth in exports was led by electronic goods, which saw a significant increase, followed by engineering goods and marine products. These sectors have become crucial drivers of India’s merchandise trade, reflecting diversification beyond traditional exports like textiles and gems.
- Electronic Goods: Registered the highest growth, contributing an additional USD 9.16 billion in April–December 2025 compared to the previous year.
- Engineering Goods: Added USD 3.38 billion in export value, showcasing India’s rising competitiveness in machinery and industrial products.
- Marine Products: Maintained robust growth, supported by strong demand across key East Asian markets.
Services Exports Cushion the Balance
Although merchandise exports posted only modest gains, services exports emerged as a key strength, contributing USD 35.5 billion in December 2025. India’s IT and software services, business process outsourcing, and financial services continued to command a strong presence in global markets. This robust performance in the services sector provided critical support to the external balance, helping to offset a portion of the merchandise trade deficit.
Imports and Trade Deficit
India’s imports climbed sharply to USD 63.55 billion in December 2025, up from USD 58.43 billion in December 2024, fueled by stronger demand for crude oil, gold, and electronic components. This surge in inbound shipments pushed the trade deficit to USD 25.04 billion, compared with USD 22 billion a year earlier. The figures highlight India’s continued reliance on imported energy and raw materials, even as the country works to diversify its export base.
April–December 2025 Performance
During the first nine months of FY26 (April–December 2025), India’s merchandise exports expanded by 2.44% to USD 330.29 billion, while imports climbed 5.9% to USD 578.61 billion. Combined exports of goods and services stood at USD 634.26 billion, reflecting a 4.33% increase from USD 607 billion in the same period last year. This trajectory signals steady progress toward the government’s ambitious goal of surpassing USD 850 billion in exports for FY26.
Government’s Outlook
Commerce Secretary Rajesh Agrawal noted that exports remained in positive territory despite global challenges. He emphasized that India’s export strategy is focusing on:
- Diversification of markets: Expanding trade with Africa, Latin America, and Southeast Asia.
- Product diversification: Boosting sectors like electronics, pharmaceuticals, and renewable energy equipment.
- Policy support through targeted incentives under the Production-Linked Incentive (PLI) scheme, coupled with streamlined trade facilitation initiatives.
Challenges Ahead
Despite the positive growth, India faces several challenges:
- Global Headwinds: Sluggish demand in Europe and trade tensions with the US.
- Rising Imports: Dependence on crude oil and gold continues to pressure the trade balance.
- Geopolitical Risks: Conflicts and supply chain disruptions could impact export momentum.
- Currency Fluctuations: Volatility in the rupee-dollar exchange rate affects competitiveness.
Conclusion
India’s exports rose in December 2025 compared to last year, reflecting resilience in key sectors like electronics and engineering. However, the sharp rise in imports widened the trade deficit, underscoring structural challenges. With services exports providing a cushion and government policies supporting diversification, India remains on track to achieve ambitious export targets. The December data highlights both the opportunities and vulnerabilities in India’s external trade, making it essential to balance growth with sustainability.