India’s exports seen rising modestly to $850 bn in FY26: GTRI

India’s total goods and services exports are projected to grow by a modest 3 per cent to around USD 850 billion in the 2025–26 financial year, according to an assessment by the Global Trade Research Initiative (GTRI). This would mark only a marginal improvement over the USD 825 billion achieved in 2024–25, reflecting mounting pressures in the global trade environment.

In the previous fiscal year, India’s merchandise exports stood at USD 438 billion, while services exports accounted for USD 387 billion. GTRI noted that sustaining export growth in FY26 will be significantly more challenging as global economic conditions weaken and trade barriers intensify.

The think tank warned that India is entering one of the toughest external trade phases in recent years, marked by rising protectionism in advanced economies, subdued global demand, and the emergence of climate-related trade measures. These factors are converging at a time when India is seeking to scale up its export footprint, making expansion increasingly difficult.

The report also flagged growing challenges in the European market. From January 1, 2026, the European Union will roll out its Carbon Border Adjustment Mechanism (CBAM), effectively introducing a carbon-linked levy on imports. Srivastava noted that even ahead of its full implementation, compliance and reporting requirements have already had a significant impact, contributing to a roughly 24 per cent decline in India’s steel exports to the EU.

Under the CBAM framework, EU importers will factor carbon costs into the pricing of Indian goods from 2026, with financial settlements to be completed through certificate surrender in 2027, further affecting competitiveness.

In response to these headwinds, GTRI has urged the government to urgently reassess the effectiveness of India’s free trade agreements on a sector-by-sector basis. The think tank emphasised that FTAs must deliver tangible export growth, deeper integration of Indian firms into global value chains, and measurable trade outcomes, rather than remaining under-utilised instruments of diplomacy.