Exports: Electronics, Garments Up, Gems & Jewellery Down

"Under the circumstances, India has performed well but we need sectoral export promotion thrusts to improve, given the huge uncertainty global trade is facing, and is likely to face in the months and perhaps years ahead," top Commerce Ministry officials told The Secretariat. 

Initial estimates of 2024-25 trade data, published by the Ministry of Commerce and Industry, show that merchandise exports stood at US$ 437.42 billion in the financial year. This is a 5.5 per cent growth of exports over the previous year.

Compared to the merchandise growth rate of 6.24 per cent in 2023-24, exports in goods have definitely slowed down, but within a decelerating global economy, the rate is still better than some of the major economies.

The caveat, however, is that the impact of the Trump tariff in April can only be gauged only after data for the next quarter comes, in due time. The current data only captures the trends in the pre-Trump tariff period.

Silver Lining Helps Push Export Thrust

In what can be perceived as a silver lining, electronic goods exports jumped substantially by 32.47 per cent, from US$ 29.12 billion in 2023-24 to US$ 38.58 billion in 2024-25.

Pharma exports are also holding steady with an export growth rate of 9.39 per cent in 2024-25.

The heartiest performance has come in the readymade garments sector, which has observed a 10.03 per cent growth in exports during 2024-25, part of it because of the turmoil in Bangladesh, which saw many orders being shifted towards India.

"We need to focus on this sector (garments), locate champion states which have low costs and can take on rivals like Bangladesh and Cambodia, which face an uncertain future in the face of Trump tariff negotiations. We will have to quickly draw up policies that encourage existing players in these states to ramp up production, and access markets," said Afaq Hussain, Director of Bureau of Research on Industry and Economic Fundamentals (BRIEF).

Engineering goods exports registered a modest increase of 6.74 per cent from US$ 109.3 billion in 2023-24 to US$ 116.67 billion in 2024-25. Petroleum products, however, decreased by 24.73 per cent in 2024-25 to US$ 63.34 billion from US$ 84.16 billion in 2023-24.

Since January this year, the USA has imposed new sanctions on Russia’s oil trade, affecting oil imports of quite a few other countries, including India. The drop in exports of petroleum products, thus, was expected.

Gems and jewellery is the other sector under distress. There is an 8.84 per cent decrease in export growth in this sector. The same goes for the chemicals (organic and inorganic), which have undergone a 2.32 per cent drop in export growth.

Petro Exports Hit Badly Even Before Trump Tariffs

The cumulative non-petroleum exports in 2024-25, worth US$ 374.08 billion, registered an increase of 6.0 per cent, compared to US$ 352.92 billion in 2023-24. This implies that petro products exports have gone down while other exports performed much closer to last year’s overall export growth.

On the other hand, merchandise imports rose by 6.2 per cent in 2024-25 at US$ 720.24 billion from US$ 678.21 billion in the previous year. This resulted in a 17.28 per cent jump in goods trade deficit at US$ 282.82 billion in 2024-25 from US$ 241.14 billion in 2023-24.

Services exports, as usual, save the day. It has gone up by 12.45 per cent, amounting to US$ 383.51 billion, in 2024-25 compared to US$ 341.06 billion in 2023-24.

This resulted in a rise in the overall trade deficit from US$ 78.39 billion in 2023-24 to US$ 94.26 billion in 2024-25 — a 20.24 per cent jump.

So, growth in goods imports is larger than the growth of goods exports. Though services exports performed relatively well, the overall trade deficit is widening.

With international trade in turmoil, India needs to find new export destinations to keep its economic development story running. Striking a bilateral trade treaty with the US, as soon as possible, should be an important part of that strategy.

Current Trade Policy Needs To Be Flexible & Dynamic

The trade data, before the Trump tariffs kicked in, shows mixed sectoral trends. While there are major concerns in sectors like petroleum products, gems and jewellery, and chemicals, there are distinct signs of hope in sectors like textile, pharma and electronic goods.

Hussain said, "India needs to utilise its advantages by finding new markets to export to while consolidating the existing ones as much as possible within the current chaotic global trade scenario."

"We are already looking at new markets in Africa and Latin America. Specific measures to address these markets, including new trade deals, need to be hastened to access them," he added.

That is the Number One priority of our current trade policy.