Record exports in a fractured trading system

India closed the financial year 2025–26 with a headline that survived a year of tariff turmoil: total exports of goods and services reached a record 863.11 billion dollars, up 4.6 per cent from 825.26 billion dollars in 2024–25, according to Commerce Ministry figures. Merchandise exports grew only 0.93 per cent to 441.78 billion dollars, held back by disrupted shipping and uncertain demand, while services exports grew 8.71 per cent to a lifetime high of 421.32 billion dollars, reflecting sustained global demand for Indian information technology, business and professional services. Total imports, however, rose faster, to 979.65 billion dollars, widening the overall trade deficit.

The export performance was helped, the government told Parliament in July 2026, by expanding market access under India's free trade agreements. Among FTA partners, merchandise exports were highest to ASEAN countries at 38.42 billion dollars, followed by the UAE at 37.36 billion dollars, SAFTA countries at 25.77 billion dollars, the United Kingdom at 13.44 billion dollars and Singapore at 11.86 billion dollars. The pattern shows the dual engine of Indian trade: services, where India runs a large surplus, and merchandise, where growth is slower and more exposed to tariffs, shipping disruption and geopolitical shocks.

The global picture in 2026 was unexpectedly resilient. In its Global Trade Outlook update of 8 October 2026, the World Trade Organization raised its forecast for world merchandise trade volume growth to 3.9 per cent in 2026, up from 1.9 per cent in its March baseline, and to 4.1 per cent in 2027. The upgrade was driven by an artificial-intelligence investment boom: trade in AI-enabling goods such as semiconductors and servers jumped 67 per cent year-on-year in the first half of 2026 and accounted for 47 per cent of global merchandise trade growth. Asia was expected to lead, with exports rising 9.9 per cent, while the WTO downgraded its services trade forecast to 3.3 per cent for 2026 because the Middle East conflict raised aviation fuel costs and disrupted transport and travel.

The lesson of 2026 for trade policy is that resilience and vulnerability can coexist. Supply chains adapted to war and tariffs faster than forecasters expected, and AI investment created a powerful new driver of goods trade. At the same time, the gains were uneven: services trade slowed, West Asian exports were forecast to contract 17.2 per cent, and the WTO warned that higher fuel and fertiliser costs from the Strait of Hormuz disruption, the war in Ukraine and any slowdown in AI investment remained live risks to the outlook.