Niti Aayog VC pitches for export diversification to beat external headwinds

We shouldn't suffer from any export cynicism, says Ashok Lahiri, vice-chairman of Niti Aayog, while launching the June-quarter Trade Watch report.

Niti Aayog vice-chairman Ashok Lahiri on Wednesday called for further diversification of India's exports, arguing that it’s key to sustaining the strong growth momentum in outbound shipments and softening the blow of external headwinds.

“We shouldn't suffer from any export cynicism,” he said, launching the government think-tank's June-quarter Trade Watch report.

An analysis of the data in the report suggests the country's diversification bid is showing early signs of success, with two African countries—Tanzania and South Africa—breaking into the top ten destinations for Indian products in the quarter, replacing Hong Kong and Saudi Arabia amid the West Asia war.

UPI charges

Separately, on the sidelines of the report launch, Lahiri told news agency ANI that businesses need to bear some Unified Payments Interface (UPI) transaction costs. He called it his personal opinion, and not Niti Aayog's.

He said the government can't subsidize everything and everyone, and at a certain point, the “user-pay” principle must kick in. The operation of the digital payment system involves costs, he said and asked who would bear it.

He also underscored the need for energy source diversification, citing it as a lesson from the West Asia war.

Critical mineral imports

The quarterly trade report showed that New Delhi's dependence on critical mineral imports is deepening amid rising domestic demand. For instance, its copper imports more than tripled to $11.8 billion in 2025, while the country remains fully dependent on nickel and cobalt imports.

India’s overall goods exports rose 16% in the quarter from a year ago to $129.5 billion, while imports grew 19.8% to $216.1 billion, resulting in a merchandize trade deficit of $86.6 billion.

Services exports “remained resilient”, rising by 9.6%, year-on-year, to $106.7 billion in the first quarter of 2026-27, resulting in a net services trade surplus of $52.22 billion.

Trade diversification

“Export markets showed greater diversification, with the Association of Southeast Asian Nations (Asean) and East Africa recording the strongest growth at 61.3% and 89.0%, respectively, driven by higher shipments of petroleum products, electrical machinery, engineering goods and agricultural products,” the report said.

Meanwhile, imports from Latin America and West Africa jumped 137.4% and 91.3%, respectively, largely driven by higher purchases of crude oil, minerals and other primary commodities. This indicates greater diversification of India’s import sourcing as well.

India’s digitally delivered services exports reached $317 billion in 2025, growing 15% on-year, lifting India from the world’s fifth-largest exporter to the fourth-largest exporter in 2025, overtaking Germany. Business services and computer services remained the dominant components of India’s digitally delivered services exports.

Scope in the metals trade

The report showed India has great opportunities to tap into metals exports. The global metals and ores import market was worth $2 trillion, but India's exports of these products accounted for only 1.8% of global demand in 2025. This includes a 2.1% share in metals and 0.5% in ores.

“Iron and steel and articles of iron and steel alone account for 50.9% of global metals demand, but India captures only 2.5% of this market,” the report said.

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