 "Economic Survey flags rising imports, services sector remains key export driver")
Between April and December 2024 (FY25), India’s overall exports—comprising both merchandise and services—reached $602.6 billion, reflecting a year-on-year (Y-o-Y) growth of 6 per cent, the Economic Survey, released on January 31, revealed.
However, a sharper rise in imports, which grew by 6.9 per cent to $682.2 billion, widened the trade deficit from $69.7 billion in 2023 to $79.5 billion in the corresponding period of FY25.
The trade deficit expanded to $210.8 billion in April-December 2024 (FY25), compared to $189.7 billion in the same period the previous year. The survey noted that while this indicates higher demand for foreign goods, it also reflects India’s evolving industrial base and consumer preferences.
Non-petroleum products, services driving exports
India’s non-petroleum exports registered a robust 7.1 per cent growth, while non-petroleum and non-gems and jewellery exports expanded by 9.1 per cent. Key contributors to this upswing were pharmaceuticals, electronic goods, engineering goods, and chemicals, which witnessed Y-o-Y growth rates of 6.4 per cent, 28.6 per cent, 9.9 per cent, and 5 per cent, respectively. Textile exports also demonstrated a healthy 7.6 per cent increase.
While India’s agricultural exports were dampened by inflationary constraints on cereals, pulses, and edible oils, the services sector continued to be a strong pillar of the economy, the survey noted. Services exports grew by 11.6 per cent in the first nine months of FY25, pushing net services receipts from $120.1 billion in FY24 to $131.3 billion in FY25.
Merchandise imports outdo exports
India’s merchandise imports saw a 5.2 per cent Y-o-Y rise, driven largely by increased non-oil, non-gold imports. These include machine tools, non-ferrous metals, and electrical and transport equipment, which amounted to $352.1 billion during April-December 2024 (FY25), signalling strong domestic consumption and industrial demand, the survey highlighted. Additionally, gold imports surged due to rising international prices and pre-festival stockpiling.
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Textile industry struggling to grow
The textile industry remains a cornerstone of India’s economy, contributing 2.3 per cent to GDP, 13 per cent to industrial production, and 12 per cent to total exports. The sector is also a major employment generator, with over 45 million people directly engaged, particularly from rural areas and micro, small, and medium enterprises (MSMEs).
“Textile exports remained resilient throughout the Covid-19 period between 2020 and 2022, but their performance has been weak over a decadal timeframe,” the survey highlighted.
In 2023, India exported textile goods worth $34 billion, with apparel constituting 42 per cent of the basket. However, despite its deep-rooted textile heritage, India’s global market share in apparel remains at 2.8 per cent—significantly lower than China (30 per cent), Bangladesh (9 per cent), and Vietnam (7 per cent). To compete effectively, India must focus on diversifying its export base beyond cotton-based products and enhancing its manufacturing competitiveness.
Expanding markets and e-commerce growth
A significant trend in India’s trade landscape has been the expansion into new export markets, including Zimbabwe, Vietnam, Tanzania, Uganda, Tunisia, Romania, Qatar, and the Philippines, the Economic Survey stated. Between April and November 2024, India successfully penetrated several untapped destinations, increasing its presence in markets where it had little or no footprint in 2023.
India’s e-commerce sector is also emerging as a crucial driver of export growth. The country’s B2C e-commerce market, currently valued at $83 billion, is projected to reach $150 billion by 2026. E-commerce exports, estimated at $4-5 billion in FY23, are expected to surge to $200-300 billion by 2030. With initiatives such as the DGFT’s Trade Connect e-Platform and a streamlined e-BRC system, India is enhancing its digital trade efficiency, making exports more accessible for MSMEs and small-scale entrepreneurs.
Services sector continues to dominate India’s exports
India’s services sector has been a major contributor to trade resilience. The country commands a 10.2 per cent share of global exports in telecommunications, computer, and information services, ranking as the world’s second-largest exporter in this category. India also holds a 7.2 per cent share in other business services, demonstrating its strong footing in consulting, outsourcing, and professional services.
Despite these strengths, India’s share in global travel and transport services remains relatively low, at 2.1 per cent and 2.2 per cent, respectively. Enhancing tourism infrastructure and global logistics networks could unlock substantial new opportunities. Additionally, India’s financial services exports lag behind global averages, signalling the need for growth in international banking, insurance, and investment services.
To sustain its trade momentum, the Economic Survey suggested that India must continue implementing strategic reforms. The government’s National Logistics Policy, focused on infrastructure development and supply chain efficiency, aims to enhance the country’s manufacturing and export competitiveness. Investments in logistics hubs and digital trade facilitation measures, such as the DGFT Trade Facilitation Mobile App, are already streamlining the export process, reducing costs, and making Indian businesses more competitive globally, it added.