India's total exports of goods and services are expected to surpass 1 trillion dollars in the fiscal year 2025-26, marking a 21 per cent year-on-year increase, according to the Federation of Indian Export Organisations (FIEO). This follows an export performance of 824.9 billion dollars in 2024-25.
FIEO President S C Ralhan attributed this strong outlook to global sourcing diversification, amid ongoing geopolitical and economic uncertainties. He said India’s ongoing efforts to finalise several free trade agreements (FTAs) will further boost outbound shipments.
Merchandise exports are projected to grow by about 12 per cent, reaching between 525 billion dollars and 535 billion dollars in FY26, up from 437 billion dollars the previous year. Services exports are likely to see an even sharper rise of 20 per cent, climbing to an estimated 465-475 billion dollars from 387 billion dollars in FY25, according to PTI.
Ralhan noted that all major sectors are set to witness growth. These include electronics, engineering goods, chemicals, textiles and garments, pharmaceuticals, and agriculture. Petroleum products and gems and jewellery both of which had seen recent downturns, are also anticipated to rebound.
Export estimates for FY26 include:
Electronics and Electricals: $60 billion
Machinery: $40 billion
Chemicals: $40 billion
Pharmaceuticals: $30 billion
Petroleum Products: $70 billion
Apparel and Made-ups: $23-25 billion
Gems and Jewellery: $30-35 billion
Agriculture: $55 billion
The Production Linked Incentive (PLI) scheme is seen as a major growth enabler for the electronics sector. Ralhan also highlighted the increasing trend of global firms, especially in the U.S., shifting their sourcing away from China.
Citing a clear example of this shift, FIEO Director General and CEO Ajay Sahai pointed out that Apple supplier Foxconn recently invested 1.48 billion dollars(approximately ₹12,800 crore) in its India operations between May 14 and 19. “It's not just Apple. Several multinational companies are exploring India as a reliable alternative,” Sahai said, adding that trade redirection from China could generate an additional 5 billion dollars in export opportunities for India.
India’s ongoing FTA negotiations with the UK, the European Free Trade Association (EFTA), and the European Union (EU) are expected to further aid export growth. A proposed interim trade deal with the U.S., which could exempt Indian goods from reciprocal tariffs, may also give exporters a competitive edge.
However, Sahai also flagged emerging concerns. Non-tariff and technical trade barriers could create new challenges, especially the European Union’s upcoming Digital Product Passport (DPP) regulation. Set to be implemented from January 1, 2026, DPP will initially cover electronics, textiles, batteries, and construction materials, requiring detailed digital documentation of each product’s entire lifecycle—from raw materials to recycling.
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“DPP could significantly increase compliance costs, particularly for MSMEs,” Sahai warned, calling such EU measures “protectionist.” He added that failure to meet these requirements could lead to shipment rejections and loss of market share in Europe, which is becoming increasingly stringent on sustainability.
The DPP joins a series of new EU regulations such as the Carbon Border Adjustment Mechanism, anti-deforestation rules, and the Eco Design Sustainable Product Regulation, all set to roll out from the beginning of 2026.
On a positive note, Sahai said that trade disruptions in global routes especially in the Red Sea are easing, with shipping activities gradually resuming despite continued geopolitical tensions in areas like Russia-Ukraine and Israel-Hamas.
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