Global trade headwinds could heighten India’s export risks: GTRI

India’s export sector may face deeper strain as global trade loses momentum, with policy shocks and rising domestic costs amplifying vulnerabilities, according to the Global Trade Research Initiative (GTRI). The think tank’s assessment is based on the World Trade Organization’s latest Goods Trade Barometer, which indicates a sharp moderation in merchandise trade after a tariff-fuelled spike earlier this year.

The WTO report, GTRI noted, shows that global trade remained resilient through early 2025, supported largely by strong demand for AI-linked products. However, as advance buying subsides and protectionist measures resurface, the pace of expansion is weakening. Most key indicators—including electronics, air cargo, container transport and automobiles—remain in growth territory but are showing signs of deceleration, while agricultural raw materials have already slipped below trend.

According to GTRI, the message from the WTO is clear: although trade growth continues for now, escalating tariffs and uncertainty around trade policies could drag global volumes lower in 2026.

India’s October export performance reflects this broader cooling but with more severe downside pressures. Merchandise exports contracted 11.8 per cent year-on-year, with shipments falling in 15 of India’s 20 major markets. Exports to the United States declined 8.6 per cent, while the UAE, UK, Italy and the Netherlands recorded even sharper drops. A pronounced fall in exports to Singapore and Australia suggests a sudden loss of momentum across Asia-Pacific value chains.

Export gains were confined to only a few destinations such as Spain and China, driven mainly by energy and commodity-linked products rather than a robust manufacturing push.

GTRI concluded that the combined impact of global trade disruptions and rising domestic cost burdens is beginning to expose India’s sensitivity to weakening world demand—echoing the broader global trend of slowing trade growth rather than a dramatic collapse.