India’s merchandise exports are projected to grow to $500-510 billion in the current financial year (FY25), recovering from a 3% decline in FY24, according to the Federation of Indian Export Organisations (FIEO). Additionally, services exports are anticipated to be $390-400 billion, bringing the total expected exports to around $890-910 billion, up from $778 billion in FY24.
Key sectors like engineering and advertising services will drive this growth, supported by the expansion of global capability centers. Traditional markets such as the United States and Europe will continue to be significant for India, with robust demand expected for technology-driven sectors, including electronics, machinery, pharmaceuticals, and medical equipment.
FIEO Vice President Israr Ahmed highlighted that the production-linked incentive (PLI) scheme will boost export production, especially in labor-intensive sectors like apparel, footwear, and gems & jewelry, which are expected to recover from last year’s decline. A favorable monsoon might also lead to the lifting of restrictions on cereal exports.
However, exporters face challenges due to rising inflation, high commodity prices, and increased sea and air freight costs. Longer shipping times and slower sales are causing delays in receiving export payments, necessitating more credit at competitive rates. FIEO suggests setting a specific target for export credit within the existing priority sector lending framework to address this issue.
The US imposing new tariffs on Chinese imports could spark a tariff war, offering India a chance to fill supply gaps. However, there is a risk of China dumping excess products in India, which the government is prepared to counteract if necessary.
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