India International Trade
Geography › Transport, Communication and International Trade · Topic 19.9
India's international trade has changed from exports of raw materials and traditional goods to a mix of engineering goods, petroleum products, electronics, pharmaceuticals and a large exports of services. Total exports of goods and services reached a record of about 863 billion US dollars in 2025–26, with services close to goods. Imports are led by crude oil, gold and electronics, so India runs a large goods deficit, partly covered by services and remittances.
6 min read · UPSC Prelims · Geography · Transport, Communication and International Trade
At a Glance
- Exports 2025–26 About 863 billion dollars, goods plus services
- Goods exports About 442 billion dollars
- Services exports About 421 billion dollars
- Top imports Crude oil, gold, electronics
- Aim 2 trillion dollars of exports by 2030
- Exam link UPSC Prelims, Geography: Transport, Communication and International Trade
Where Does It Fit?
This is the last topic of the macro on transport, communication and international trade. The previous topics explained the routes, the rules and the ports of trade, and this one applies them to India. The next macro begins the study of economic activities and industrial location. Previous topic: Ports as Gateways of International Trade. Next topic: Primary Activities – Gathering, Pastoralism and Livestock Rearing.
What Is the Scale and Composition of India’s Trade?
In short: India’s exports have moved from tea and jute to engineering goods, refined oil, electronics and software, but oil and gold keep the goods trade in deficit.
At independence, India exported raw materials and traditional goods such as tea, jute and cotton textiles and imported manufactures and food. After the reforms of 1991, trade opened up, and exports of engineering goods, petroleum products, gems and jewellery, drugs and chemicals, and services grew, so that the economy is now much more tied to world trade. According to the Ministry of Commerce, total exports of goods and services in 2025–26 were about 863 billion US dollars, a record, with merchandise exports of about 442 billion dollars, a small increase on the previous year, and services exports of about 421 billion dollars, a rise of nearly 9 per cent. Services, led by information technology, business services and global capability centres, are now almost half of the exports.
| Direction | Main items |
|---|---|
| Exports | Engineering goods, refined petroleum products, electronic goods led by smartphones, gems and jewellery, drugs and pharmaceuticals, organic and inorganic chemicals, rice, marine products, textiles and garments; and services such as software and business services |
| Imports | Crude oil and petroleum products, copper Indian gold mine Hutti in Raichur, Karnataka…">gold and silver, electronic goods and components, coal, vegetable oils, fertilisers, machinery, and chemicals; India imports about 85 per cent of its crude oil, as in Energy and Biotic Resources of the Oceans |
The goods trade deficit is large, because of oil, gold and electronics imports. In early 2026, the monthly deficit rose to over 30 billion dollars in some months, partly due to the import of gold and silver. The deficit in goods is partly offset by a surplus in services and by remittances, which were about 129 billion dollars in 2024, as in Consequences of Migration, so the current account deficit stays small.
Who Are India’s Main Trading Partners?
The direction of trade shows who buys from and sells to India.
- Exports: the United States is the largest single destination, followed by the United Arab Emirates, the Netherlands, the United Kingdom and others in Europe, with growing sales to Africa and Southeast Asia.
- Imports: China is the largest source of goods, mainly electronics, machinery, chemicals and solar equipment; then Russia, mostly for crude oil, the United Arab Emirates, the United States, Saudi Arabia and Iraq.
- Shifts: the share of Europe and the United States in India’s exports has fallen over the long term, and that of Asia, West Asia and Africa has risen, a pattern known as the eastward and southward shift of trade. India’s trade deficit with China is the largest of any partner.
- Movement of goods: most of it by sea through Mumbai and JNPA, Mundra, Chennai and other ports, as in Ports as Gateways of International Trade, and the rest by air and land to Nepal, Bhutan and Bangladesh.
What Are the Policies and Current Issues?
- Foreign Trade Policy 2023: aims at 2 trillion US dollars of exports of goods and services by 2030, with export hubs in districts, incentives, and a shift from incentives to remission of duties and taxes under schemes such as RoDTEP.
- Production Linked Incentive and Make in India: support for manufacturing and exports of electronics, pharmaceuticals and other sectors.
- Trade agreements: India has agreements with the United Arab Emirates and Australia (2022), the European Free Trade Association (in force from October 2025), a trade agreement with the United Kingdom (signed in July 2025), and the negotiations for an agreement with the European Union were concluded in January 2026, though not yet signed. Talks with the United States for a trade agreement have been affected by tariffs.
- US tariffs: tariffs on Indian goods in the United States rose to 50 per cent from August 2025, and exports to the United States fell sharply in the months after; they were later cut under an interim understanding, and a US Supreme Court ruling changed the legal basis for many tariffs, so the position needs to be checked in current announcements, as in World Trade Organisation and Regional Trade Blocs.
- Services and digital: India’s services exports are resilient, and the global capability centres of multinational firms have grown, but risks include visa rules and automation.
As an analytical point, India’s trade structure shows a strong services and a weaker manufacturing export base: the share of India in world goods exports is only about 2 per cent, so growth depends on scaling up manufacturing for export, integrating into global value chains, improving logistics costs and diversifying markets, while reducing the dependence on imported energy and electronics components, which are the two biggest sources of the deficit.
Why Is This Topic Important?
- Facts Composition and partners asked
- Current affairs Record exports, tariffs, FTAs
- Policy Export strategy
What Came Next?
The next macro begins the study of economic activities and industrial location with primary activities. Next topic: Primary Activities – Gathering, Pastoralism and Livestock Rearing.
Key People and Terms
- Trade deficit Imports exceed exports
- RoDTEP Remission of Duties and Taxes on Exported Products
- FTA Free trade agreement
- GCC Global capability centre
- Current account Trade in goods and services plus income
- PLI Production Linked Incentive
Exam Corner
Points to Remember
- Exports in 2025–26: about 863 billion dollars.
- Services are almost half of the exports.
- Oil, gold and electronics drive the deficit.
- US is the largest export market; China the largest source of imports.
- Export target: 2 trillion dollars by 2030.
Do Not Confuse With
- Trade deficit and current account deficit Goods gap versus overall external gap
- FTA and CEPA Goods-focused versus wider economic partnership
- Merchandise and services exports Goods versus software and business services
Memory Hook
Oil, gold and chips come in; engineering, refined fuel, pharma and software go out; services close the gap.
Mains Angle
Questions ask for trends and policy. These points add depth.
- Structure Services-led surplus
- Risk Energy and electronics dependence
- Strategy FTAs and value chains
A Question You May Face
An original practice question, not a past paper question.
“Examine the changing composition and direction of India’s international trade and discuss the challenges of increasing exports in the present global environment.”
How to Answer
- Composition Goods and services.
- Direction Partners and shifts.
- Deficit Oil, gold, electronics.
- Policy FTAs and tariffs.
GS Relevance
Frequently Asked Questions
What were India's exports in 2025–26?
According to the Ministry of Commerce, India's total exports of goods and services in 2025–26 were about 863 billion US dollars, an all-time high and about 4.6 per cent more than the previous year. Merchandise exports were about 442 billion dollars and services exports about 421 billion dollars.
What are India's main exports and imports?
India's main exports are engineering goods, refined petroleum products, electronic goods, gems and jewellery, drugs and pharmaceuticals, chemicals and textiles, along with software and business services. Its main imports are crude oil, gold, electronic goods, coal, vegetable oils, fertilisers and machinery.
Why does India have a large trade deficit?
India has a large deficit in goods trade because it imports about 85 per cent of its crude oil, large quantities of gold and silver, and electronic goods and components, while its merchandise exports are smaller. The deficit is partly offset by a surplus in services and by remittances from overseas Indians.
Who are India's major trading partners?
The United States is India's largest export market, followed by the United Arab Emirates and others in Europe, while China is the largest source of imports. Russia, the UAE, the United States and Saudi Arabia are other important sources, mainly of crude oil and other energy and goods.
Which trade agreements has India signed recently?
India has signed trade agreements with the UAE and Australia in 2022, the European Free Trade Association, which came into force in October 2025, and the United Kingdom in July 2025. Negotiations with the European Union were concluded in January 2026, and talks with the United States are affected by tariffs.
PYQ Practice — Statement Analysis
1 Services contribute almost half of India's total exports.
About 421 of 863 billion dollars.
2 India's largest import by value is food grains.
It is crude oil.
3 China is the largest source of India's imports.
Mostly electronics and machinery.
4 India's Foreign Trade Policy 2023 targets 2 trillion dollars of exports by 2030.
For goods and services together.
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