India's Trade Remains Resilient in Q1 FY26 Amidst Global Headwinds: DEA Report
The report also provided insights into the broader global trade environment, acknowledging that continuing geopolitical tensions have introduced uncertainty and complexity into global trade flows.
Despite evolving global trade dynamics, India's trade performance demonstrated remarkable resilience in the first quarter of the financial year 2026, according to the latest Monthly Economic Review report released by the Department of Economic Affairs (DEA).
The report highlights a robust 5.9% year-on-year (YoY) growth in total exports, encompassing both goods and services, during the April-June period of FY26. Notably, core merchandise exports, excluding petroleum and gems & jewellery, showcased even stronger growth at 7.2% YoY. These figures highlight the inherent strength and stability of India's external sector, even when confronted with global economic uncertainties.
"Amid shifting global trade patterns, India's trade performance remains resilient in Q1 of FY26," stated the report, emphasizing the nation's ability to navigate complex international trade environments.
Adding to the indicators of economic stability, India's foreign exchange reserves remained at a comfortable level, providing an import cover of over 11 months. This strong reserve position offers a crucial buffer against potential external shocks, bolstering the economy's resilience. Furthermore, the Indian rupee exhibited low volatility, and its exchange rate remained well contained through the end of June 2025, despite fluctuations in global oil prices and a brief conflict in the Middle East.
The report also provided insights into the broader global trade environment, acknowledging that continuing geopolitical tensions have introduced uncertainty and complexity into global trade flows. However, global trade in goods and services collectively demonstrated resilience in the first half of 2025, expanding by USD 300 billion.
According to UNCTAD's July 2025 update, while global trade growth slowed in the first quarter of 2025, it rebounded in the second quarter. Developed countries were at the forefront of this trade growth, with developing nations, despite their earlier strong performance, lagging behind during this specific period.
A positive development highlighted by the DEA report is the declining trend in trade-related uncertainty. The Trade Policy Uncertainty Index, which had peaked in April 2025, registered a significant month-on-month drop of approximately 35% by June 2025. This indicates an improving sense of clarity and stability in global trade policies.
In response to ongoing global trade challenges, countries worldwide are increasingly opting for bilateral negotiations to resolve trade disputes. Simultaneously, there's a growing focus on building supply chain resilience through incentives for domestic production in critical sectors and diversification of sourcing across various regions. These concerted efforts aim to ensure the long-term viability and stability of trade flows within a fragmented global economic ecosystem.
Published By : Rajat Mishra
Published On: 29 July 2025 at 11:00 IST