Export momentum can be sustained with focus on higher value products, new destinations: Economic Survey

In order to sustain the export momentum, the focus should be on diversification towards higher-value, more sophisticated products and new destinations. Targeted industrial policies, technological improvements, and export-driven ecosystems can yield significant benefits, according to the Economic Survey 2025-2026.

The current global trade scenario is of a fragmented and cautious world where “protectionist instincts are taking precedence over outreach for imports, supply chains are being recalibrated in response to geopolitical shifts, and the terms of engagement are shifting more toward bilateralism.”

Trade policy uncertainty driven by rising protectionism and retaliatory tariffs, strategic decoupling among major economies and the migration of national security tools into the domain of trade policy are the challenges. Hence, economies likely to be impacted by these shifts are turning inward.

The Trade Policy Uncertainty Index and the Global Economic Policy Uncertainty Index peaked in April 2025, driven by the weakening of regional and multilateral trade agreements that had previously provided stability, countries’ pursuit of sovereign interests through industrial policies, and intensifying competition for rare earth minerals. The emergence of ‘minilateral’ platforms, such as the Quadrilateral Security Dialogue and the Indo-Pacific Economic Framework for Prosperity, along with new connectivity corridors, suggests that the dynamics of global relations are shifting.

In April-December 2025, Indian exports registered 4.3 % (YoY) increase, whereas imports increased by 4.9 % (YoY). During the same period, the trade deficit increased to $ 96.6 billion compared to $ 88.4 billion in the corresponding period of the previous year.

Merchandise exports registered 2.4% growth (YoY), while non-petroleum, non-gems and jewellery exports increased by 6 %.

An expanding network of Free Trade Agreements supports India’s trade strategy by offering reliable market access amid global uncertainty. Further, performance of the sectors covered under the Production Linked Incentive scheme indicates an early accomplishment in import substitution.

A significant area to tap in exports is agriculture, the Survey noted. The country has the potential to reach $ 100 billion of combined exports of agriculture, marine products and food and beverage in the next four years. By maintaining a delicate balance between fulfilling domestic demand and harnessing its export potential, India’s achievements in agricultural production can translate into export-led growth.