INDIA’S EXPORTS RISE BUT TRADE DEFICIT WIDENS

Why in the News?

• Export Growth: India’s overall exports rose by 17% year-on-year to $80.45 billion in January 2026.
• Deficit Expansion: Faster growth in imports led to widening of the overall trade deficit to $10.38 billion.

EXPORT PERFORMANCE AND SECTORAL TRENDS

• Overall Exports: Combined merchandise and services exports increased from $71.09 billion to $80.45 billion, indicating improved external demand.
• Merchandise Growth: Merchandise exports saw marginal rise from $36.34 billion to $36.56 billion, reflecting moderate goods trade expansion.
• Services Surge: Services exports recorded robust growth from $34.75 billion to $43.90 billion, driven by IT and professional services.
• Diversified Basket: Export growth suggests resilience in India’s services-led trade model, offsetting slower merchandise momentum.
• Policy Support: Performance aligns with government’s focus on export promotion, trade facilitation, and services competitiveness.

IMPORT TRENDS AND TRADE DEFICIT DYNAMICS

• Import Acceleration: Overall imports grew by 76%, reaching $90.83 billion, outpacing export growth.
• Merchandise Imports: Higher goods imports may reflect increased demand for energy, electronics, and capital goods.
• Services Imports: Rise in services imports indicates expanding cross-border digital and professional transactions.
• Deficit Expansion: Trade deficit widened from $5.39 billion to $10.38 billion, signalling external sector pressures.
• Macroeconomic Impact: Sustained deficits can affect current account balance, currency stability, and foreign exchange reserves.