India’s trade showcased cautious resilience in Q3 FY 2024–25, despite mounting global economic challenges and evolving US trade policies, according to the third edition of ‘Trade Watch Quarterly’ released by NITI Aayog.
Unveiled by NITI Aayog Member Dr. Arvind Virmani, the latest edition of the Trade Watch Quarterly offers a data-centric snapshot of India’s external trade during a turbulent international economic landscape marked by policy shifts and geopolitical uncertainties.
“India’s merchandise exports grew 3% year-on-year in Q3, reaching $108.7 billion. Imports, however, rose by a sharper 6.5% to $187.5 billion, widening the merchandise trade deficit. Despite this gap, robust growth in the services sector played a balancing role.”
“Services exports surged by 17% during the quarter, generating a surplus of $52.3 billion.”
This healthy performance in the services sector helped cushion the blow from the expanding merchandise trade gap. India’s strength in software services, IT-enabled services, and consulting contributed significantly to this growth.
“Aircraft, spacecraft, and related parts broke into the top ten export categories for the first time, posting a year-on-year growth of over 200%.”
This milestone signals India’s growing role in the aerospace supply chain and reflects the country’s ambition to become a key player in advanced manufacturing and high-technology exports.
“Regionally, North America and the European Union continued to dominate India’s export destinations, together accounting for nearly 40% of outbound shipments.”
This consistency in key export destinations points to the strategic importance of India’s trade ties with developed economies, especially as geopolitical realignments continue to reshape global trade flows.
“India’s prowess in the digital space was also reinforced, with the country ranking as the world’s fifth-largest exporter of Digitally Delivered Services (DDS), accounting for $269 billion in 2024.”
The digital economy continues to be a cornerstone of India’s global trade, contributing to resilience and diversification across services.
“High-tech merchandise exports, led by electrical machinery and arms/ammunition, have sustained robust momentum since 2014, growing at a compound annual growth rate of 10.6%.”
This consistent growth in high-tech goods signals India's transition from a traditional export base to a more technology- and innovation-driven portfolio.
The thematic section of the report delves deep into the implications of evolving US trade policy.
“This quarter’s thematic focus analyzes the impact of evolving US trade policy, particularly shifts in tariffs. The report identifies India’s relative tariff advantage over key competitors as a strategic window to expand its footprint in the American market.”
“Sectors such as pharmaceuticals, textiles, and electrical machinery are especially well-positioned to capitalize on these changes. The report stresses that timely and adaptive policymaking will be crucial in leveraging these changes to enhance India’s export competitiveness.”
This insight signals an opportunity for Indian exporters to expand their presence in the U.S. by offering cost-competitive and high-quality alternatives.
India’s trade performance in the third quarter of FY 2024–25 underscores the nation’s ability to navigate global headwinds through resilience, innovation, and strategic foresight.
Despite a widening merchandise trade deficit, the robust growth in services exports, particularly in digitally delivered services, demonstrates the evolving strength of India’s knowledge economy. The significant rise in high-tech and aerospace exports signals a maturing export basket that is shifting towards advanced and value-added sectors.
NITI Aayog’s latest Trade Watch Quarterly emphasizes that sustaining and enhancing this momentum will require adaptive, data-driven policymaking, particularly in response to evolving global trade dynamics such as US tariff shifts.
Proactive measures in areas like infrastructure support, export incentives, and market diversification will be critical. By leveraging its tariff advantages, strengthening emerging sectors, and promoting innovation, India is well-positioned to expand its global trade footprint and assert itself as a key player in international commerce in the years ahead.