Exports surge paves the way for much-needed reforms

In recent years, government has entered into several free trade agreements, but it must move forward on some of the more contentious ones as well. It should take steps to boost manufacturing activity and attract more foreign investments into the country

The currency’s decline is likely to have played a role in increasing export competitiveness.

3 min readOct 17, 2026 06:40 AM IST First published on: Oct 17, 2026 at 06:40 AM IST

India’s goods exports continue to record robust growth. In September, merchandise exports rose to $44.4 billion, up by a staggering 23 per cent. Strong growth over the past few months has pushed up exports in the first half of the year to $259 billion. Considering that growth has been sluggish for several years after the bump during the Covid period — in 2025-26, exports stood at $441 billion, up less than 5 per cent from $422 billion in 2021-22 — this uptick is welcome.

The disaggregated data shows that engineering and electronic goods are among the drivers of this growth. Exports of these segments have together crossed $100 billion in the financial year so far, up 26 per cent over the same period last year. This is a stunning performance. The two sectors now account for almost half of all non-oil exports in the year so far. Data also shows that the US remains the largest market for Indian exports. Despite the persisting ambiguity over tariffs, exports to America rose 48 per cent in September. Exports to China also grew at a robust pace and are up 36 per cent in the year so far. However, shipments to the Middle East — countries like the UAE and Saudi Arabia — remain depressed. On the other hand, China accounted for the largest share in the country’s import basket. India’s trade deficit with that country widened to $68.9 billion during April-September this year, up from $54.4 billion over the same period last year. Ratings agency ICRA expects the current account deficit to increase to $13-15 billion during the second quarter “amid a modest expansion in the merchandise trade deficit and an expected easing in invisible earnings”.

The currency’s decline is likely to have played a role in increasing export competitiveness. However, the fall has also prompted the RBI to announce several measures and intervene in the forex markets to stem the slide. While the RBI has repeatedly said that it intervenes only to contain excess volatility, it should resist targeting any rupee/dollar level. Alongside, the government must continue to push ahead with its reform agenda. In recent years, it has entered into several FTAs, but it must move forward on the more contentious ones as well. It should take steps to boost manufacturing activity and attract more foreign investments.