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India's Export Outlook: Why Goods Exports May Shrink 1% Amid Service Slowdown

A new report from CareEdge Ratings paints a cautious picture for India's external trade. It projects that the country's goods exports will actually contract by about 1% in the coming fiscal year. This downturn is largely blamed on the impact of US tariffs and tougher global trade conditions. While services exports are still a strong point for the economy, their growth rate is also expected to slow down.

Key Points: India Goods Exports to Contract 1% in FY26 as Services Slow

  • Goods exports projected to contract by 1% in FY26 after marginal growth last year
  • Slowdown attributed to US tariffs and weakened global trade conditions
  • Services exports remain resilient but growth rate has also moderated
  • Petroleum exports show a sharp decline, dragging down overall merchandise performance
2 min read

India's goods exports likely to contract by 1% in FY26, service exports too slowed: Report

CareEdge Ratings report projects a 1% contraction in India's goods exports for FY26, with service export growth also slowing due to global trade headwinds.

"We project India's goods exports to contract by around 1 per cent in FY26 as against a growth of 0.1 per cent in FY25 - CareEdge Ratings Report"

New Delhi, December 18

India's goods exports are expected to contract by around 1 per cent in FY26, compared to a marginal growth registered last year, according to a report by CareEdge Ratings.

The report highlighted that while goods exports have weakened in recent months, services exports have continued to remain healthy and resilient, but they have also slowed down.

It stated "We project India's goods exports to contract by around 1 per cent in FY26 as against a growth of 0.1 per cent in FY25".

CareEdge Ratings noted that the slowdown in goods exports is due to the imposition of US tariffs, which has affected global trade conditions. As a result, India's merchandise exports have shown subdued performance, especially during the April-October period of FY26. In contrast, services exports have continued to perform well.

Data shared in the report showed that total goods export growth slowed sharply. During April-October FY25, total goods exports grew by 3.3 per cent, but in the same period of FY26, growth dropped to just 0.5 per cent.

The weakness is more visible in petroleum exports. Petroleum exports declined by 13.9 per cent in April-October FY25 and fell further by 17.1 per cent in April-October FY26.

Non-petroleum exports, however, have shown relatively better performance. Non-petroleum exports grew by 7.5 per cent during April-October FY25 and by 3.9 per cent in the same period of FY26.

Despite this support from non-petroleum items, overall goods exports remain under pressure, leading to the projection of a contraction in FY26.

On the other hand, services exports have stayed strong, supported mainly by software services and business services, but the rate of growth has slowed down recently.

Services exports stood at USD 181.4 billion during April-October FY23 and grew sharply by 31.4 per cent. In FY24, services exports increased to USD 192.0 billion, though growth moderated to 5.8 per cent. The momentum picked up again in FY25, with services exports rising to USD 216.4 billion, recording a growth of 12.7 per cent.

In FY26 (April-October), services exports further increased to USD 234.2 billion, with a year-on-year growth of 8.2 per cent.

Looking ahead, the report projects that services exports will continue to perform well, with a growth of 8.5 per cent in FY26 but it is lower compared to 13.6 per cent in FY25.

Overall, the report said that while global challenges and trade restrictions are impacting goods exports, India's services exports are providing stability and helping cushion the impact on the economy.

- ANI

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Reader Comments

P
Priya S
The 17% drop in petroleum exports is huge! With global push for green energy, maybe it's time to double down on our renewable sector and become an exporter of solar tech and green hydrogen. 🍃 Future-proofing our exports is key.
R
Rohit P
Software and business services are carrying the whole team on their back! 💻 It shows where our real strength lies. But we can't just rely on services. 'Make in India' needs to deliver more tangible results for goods exports.
S
Sarah B
Working in the export sector, I can feel this slowdown. Orders are getting delayed and clients are more cautious. The global economic mood is not great. Hope the government announces some supportive measures soon.
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Vikram M
Non-petroleum exports are still growing, which is good. It means our pharma, textiles, engineering goods have demand. We should focus on these sectors and explore new markets in Africa and Latin America to reduce dependency on the West.
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Karthik V
A respectful critique: Reports like these often come out, but where is the concrete action plan? We need a clear, sector-by-sector strategy with timelines. Just highlighting the problem isn't enough. The slowdown in services growth from 13.6% to 8.5% projected is also a warning sign.
M
Meera T

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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