According to the report, India’s total exports reached USD 825 billion in FY25 and are projected to rise only marginally to around USD 850 billion in FY26, underscoring a challenging global trade environment. Merchandise exports are expected to remain largely flat due to weak international demand and rising protectionist measures, while services exports could surpass USD 400 billion, providing the main support to India’s overall trade performance.
“With 18 FTAs already signed and more possible in 2026, India’s priority must shift from signing deals to making FTAs deliver real export gains,” the report said.
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GTRI highlighted that India is entering 2026 amid one of the most difficult global trade climates in years. Rising protectionism in advanced economies, slowing global demand, and new climate-linked trade barriers are coinciding with India’s efforts to scale up exports, making the outlook less about expansion and more about retaining ground.
The United States has emerged as a critical pressure point. Under President Donald Trump, the U.S. has bypassed World Trade Organization norms in favour of steep unilateral tariffs. Between May and November 2025, India’s exports to the U.S. fell around 21 percent under the current 50 percent tariff regime. GTRI warned that unless Washington rolls back the additional 25 percent penalty tariff linked to India’s Russian oil purchases or signs a trade deal, exports to India’s largest market could face further erosion.
Europe poses a different challenge. The European Union will launch its Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026, imposing a carbon tax on imports. Even before payments begin, compliance and reporting obligations have already pushed India’s steel exports to the EU down by roughly 24 percent. From next year, EU importers will price Indian goods to include CBAM costs, with payments to be made via certificate surrender in 2027.
Despite these headwinds, the report noted signs of resilience. While exports to the U.S. declined, shipments to other global markets rose by about 5.5 percent, reflecting a gradual diversification of export destinations.
GTRI stressed that with limited leverage over global geopolitics, India must focus inward. Growth in exports will rely on improving product quality, moving up the value chain, and lowering costs.
“In 2026, India’s trade performance will be decided less by external opportunities and more by domestic execution,” the report said.