India posts $31 billion trade deficit with FTA partners in Q2 of FY26

New Delhi: India registered a trade deficit of $31 billion in the second quarter of the current financial year with its FTA partner countries that include the UAE, Singapore, Australia, Japan and South Korea, as per a report released by NITI Aayog on Friday.

India’s exports to its FTA partner countries in Q2 of 2025-26 stood at $38 billion, while imports from these nations rose to $69.8 billion, resulting in a trade deficit of $31 billion.

India’s export shipments to the Association of Southeast Asian Nations (ASEAN) dipped by 16.8% YoY during the quarter under review. It fell by 18.7% to Australia, 32.1% to Malaysia, 36.7% to Singapore and 51.8% to Mauritius.

Offsetting these declines, exports recorded growth to the UAE (10.5%), South Korea (14.7%), Thailand (16.1%), Sri Lanka (17.6%), and Japan (7.5%), as per data released by NITI Aayog in its sixth edition of ‘Trade Watch Quarterly’.

Imports from FTA partners increased to $69.8 billion in the July-September 2025 quarter, from $66.8 billion recorded in the corresponding period of the previous year, driven by higher inflows from ASEAN (4.4%), SAFTA (82.2%), Singapore (6.7%), Malaysia (16.2%), Japan (13.0%), and Thailand (13.3%). Imports declined from Australia (-27.5%) and South Korea (-2.6%).

The PM Narendra Modi government has announced the conclusion of five trade deals in less than a year. It includes deals with the UK, the EU, Oman, New Zealand, and the US.

“Overall, India’s FTAs remain resilient, with strong export gains in key markets and rising imports signaling deeper trade integration,” NITI Aayog noted in the report.

India’s total merchandise and services trade grew by 5.1% YoY during April-September 2025, reaching $895.1 billion. Exports rose faster than imports, supported by robust growth in services and select merchandise categories.

The thematic section of this quarter’s edition focuses on India’s electronics trade, examining global demand patterns, export footprint across mobile phones, consumer electronics, industrial electronics, and components, and participation in global electronics value chains.

“Electronics, as the organising core of modern manufacturing value-chains, with semiconductors and components, plays a key role in determining trade balances and technological sovereignty,” said NITI Aayog Vice-Chairman Suman Bery.

“While India has achieved scale in final assembly, sustained competitiveness will depend on correcting structural cost disabilities, deepening domestic component ecosystems, and leveraging anchor investments in components to embed Indian firms more firmly within global production networks,” Bery said.

The electronics segment represents a $4.6-trillion global market. India’s share stands at around 1% for 2024. The country’s electronics exports are concentrated in mobile phones, which make up 52.5% of the basket, while power equipment and wires contribute smaller shares. Imports are dominated by integrated circuits (23.7%), mobile phones (17.5%), and data-processing machines (10.6%).