India Goods Exports to Shrink 1% FY26 on US Tariffs; Services Hold Strong: CareEdge

 India's goods exports are expected to contract by around 1 per cent in FY26, compared to a marginal growth registered last year, according to a report by CareEdge Ratings. The report highlighted that while goods exports have weakened in recent months, services exports have continued to remain healthy and resilient, but they have also slowed down.

It stated, "We project India's goods exports to contract by around 1 per cent in FY26 as against a growth of 0.1 per cent in FY25".

CareEdge Ratings noted that the slowdown in goods exports is due to the imposition of US tariffs, which has affected global trade conditions. As a result, India's merchandise exports have shown subdued performance, especially during the April-October period of FY26. In contrast, services exports have continued to perform well.

Data shared in the report showed that total goods export growth slowed sharply. During April-October FY25, total goods exports grew by 3.3 per cent, but in the same period of FY26, growth dropped to just 0.5 per cent. The weakness is more visible in petroleum exports. Petroleum exports declined by 13.9 per cent in April-October FY25 and fell further by 17.1 per cent in April-October FY26.

Non-petroleum exports, however, have shown relatively better performance. Non-petroleum exports grew by 7.5 per cent during April-October FY25 and by 3.9 per cent in the same period of FY26. Despite this support from non-petroleum items, overall goods exports remain under pressure, leading to the projection of a contraction in FY26.

On the other hand, services exports have stayed strong, supported mainly by software services and business services, but the rate of growth has slowed down recently. Services exports stood at USD 181.4 billion during April-October FY23 and grew sharply by 31.4 per cent. In FY24, services exports increased to USD 192.0 billion, though growth moderated to 5.8 per cent. The momentum picked up again in FY25, with services exports rising to USD 216.4 billion, recording a growth of 12.7 per cent.

In FY26 (April-October), services exports further increased to USD 234.2 billion, with a year-on-year growth of 8.2 per cent.

Looking ahead, the report projects that services exports will continue to perform well, with a growth of 8.5 per cent in FY26 but it is lower compared to 13.6 per cent in FY25.
Overall, the report said that while global challenges and trade restrictions are impacting goods exports, India's services exports are providing stability and helping cushion the impact on the economy.