India’s recent export performance offers grounds for cautious optimism. Amidst uncertainty over the US market, India’s merchandise exports to several Asian and African markets expanded hugely during the first half of 2026-27. These include China, Singapore, Malaysia, Hong Kong, South Africa and Tanzania. Interestingly, exports to Spain also improved substantially. For the first half of 2026–27, merchandise exports increased by 18.51 per cent to US$259.89 billion from US$219.30 billion in the corresponding period of the previous year. Total exports of goods and services rose by 13.84 per cent to US$476.20 billion.
This could happen despite the fact that there has been a setback in exports UAE which has been a major destination for Indian exports due to the conflict in West Asia. The acceleration of export growth is significant because it suggests that Indian exporters have been able to respond to difficult external conditions quite effectively.
The icing on the cake is that the merchandise trade deficit narrowed to US$30.21 billion in September 2026 from US$33 billion in September 2025. Exports rose by 23.04 per cent from US$36.08 billion in September 2025 to US$44.40 billion in September 2026, whereas imports increased by approximately 8 per cent, to US$74.61 billion. The combined goods-and-services trade deficit also narrowed to US$13.30 billion in September, compared with US$14.17 billion a year earlier. This monthly improvement is encouraging, but it needs to be taken with caution. For April–September as a whole, merchandise imports increased by 16.31 per cent to US$437.53 billion, compared with exports of US$259.89 billion. The cumulative merchandise trade deficit consequently widened to US$177.64 billion from US$156.88 billion in the previous year. The overall goods-and-services trade deficit also increased to US$74.93 billion from US$58.10 billion.
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The most striking development is the strong performance of electronics and engineering goods. Electronics exports rose by 70.44 per cent in September, from US$3.11 billion to US$5.31 billion. Engineering goods exports increased by 20.91 per cent to US$12.17 billion, while petroleum product exports rose by 31.90 per cent to US$6.22 billion. During the same period, exports of organic and inorganic chemicals increased by 24.21 per cent to US$2.94 billion. During the first half of the year, exports in these sectors rose by 44.00 per cent, 19.8 per cent 37.1 per cent and 15.6 per cent respectively. This performance also indicates that export expansion increasingly involves manufactured products. This also indicates that India’s manufacturing push through make in India programme and production linked incentive scheme are showing results.
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