India’s exports to fall short of $1-trillion target, despite FTA push: GTRI analysis

New Delhi: India’s total exports, merchandise and services put together, is likely to remain at around $850 billion in the current financial year, falling well short of the Prime Minister Narendra Modi government’s target of $1 trillion, despite push for free trade deals with multiple countries.

Goods exports, which stood at $438 billion in 2024-25, are expected to remain broadly flat in the current fiscal due to weak global demand and high US tariffs. However, services exports are likely to inch past $400 billion in 2025-26 from $387 billion recorded in the previous year, as per an analysis by the Global Trade Research Initiative (GTRI).

In the financial year ended March 2025, India’s total exports stood at $825 billion. For the current fiscal, the government has set an exports target of $1 trillion.

GTRI Founder Ajay Srivastava said in a note that the $1 trillion exports target now “looks more aspirational than realistic in a slowing, protectionist global economy”.

The external environment is deteriorating fast. The US, under President Donald Trump, has sidelined World Trade Organisation disciplines in favour of steep unilateral tariffs. India’s exports to the US fell by about 21 per cent between May and November 2025, under the current 50 per cent tariff regime, Srivastava said.

Unless Washington rolls back the additional 25 per cent penalty tariff linked to India’s Russian oil purchases — or concludes a trade deal — exports to India’s largest market risk further erosion, he added.

During the April-November period of the current financial year, India’s total export stood at $562.13 billion, which is 5.43 per cent higher than $533.16 billion recorded in the corresponding period of the last year. Merchandise export rose from $284.60 billion in April-November 2024, to $292.07 billion in the first eight months of 2025-26, as per the latest data released by the Ministry of Commerce & Industry.

In the second half of 2025, goods exports were hit due to high US tariffs and weak global demand. The situation is unlikely to improve next year, despite a push for free trade deals with multiple countries.

“India enters 2026 facing a far tougher global trade environment than it has seen in years. Rising protectionism in advanced economies, weakening global demand and new climate-linked trade barriers are colliding, just as India is trying to scale up exports,” GTRI said.

While the uncertainties over the US tariffs continue, Indian exporters brace for a new challenge from the EU’s Carbon Border Adjustment Mechanism (CBAM), which is scheduled to come into force from January 1, 2026.

Through the CBAM, the 27-nation bloc seeks to impose carbon tax on imports. CBAM compliance and reporting requirements have already pushed India’s steel exports to the EU down by about 24 per cent.

In 2025, India moved decisively in trade diplomacy, concluding trade deals with the UK, Oman and New Zealand. This has taken the total number of India’s comprehensive FTAs to 18. Talks are underway with the US, the EU, Russia and Mexico. If concluded, India would have trade agreements with virtually every major economy, except China.

“The challenge now is not signing more deals, but making existing ones work,” said Srivastava.

“India must urgently review the performance of its FTAs — sector by sector — to ensure that they are actually expanding exports, integrating Indian firms into global value-chains, and delivering measurable trade gains, rather than remaining under-utilised diplomatic trophies,” he added.