The year of tariffs: India's exports impacted, yet stay on a steady course in 2025; momentum likely to extend into 2026

India's recent export performance and future projections paint a promising picture, signaling a robust trajectory for the nation's economic growth and global standing. This positive outlook, particularly the strong growth projected for 2026 and the unexpected surge in exports to the US in 2025 despite tariffs, is a testament to India's strategic economic recalibration and increasing competitiveness.

**Background Context:** For decades after independence, India pursued an import-substitution industrialization strategy, characterized by high tariffs and quantitative restrictions, aimed at self-reliance. While this built domestic capacity, it often stifled export competitiveness. The economic reforms of 1991 marked a watershed moment, liberalizing the economy and opening it up to global trade. Since then, successive governments have focused on integrating India into the global economy, albeit with periods of protectionist tendencies. The current emphasis on export promotion is a continuation of this post-1991 trajectory, amplified by global geopolitical shifts and a renewed focus on domestic manufacturing.

**What Happened:** The core of the current narrative is the projected strong growth in Indian exports for 2026, with momentum likely to extend into 2026. This optimism is fueled by several factors. Firstly, India's proactive engagement in forging new trade pacts, such as those with the UK, Oman, and New Zealand, is expected to significantly boost market access and reduce trade barriers for Indian goods. These Free Trade Agreements (FTAs) are crucial for securing preferential access in key markets. Secondly, a remarkable aspect has been the surge in exports to the United States in 2025, even in the face of existing tariffs. This indicates the resilience and competitiveness of Indian products, possibly due to shifting global supply chains where buyers are diversifying away from traditional sources. Thirdly, specific sectors are leading this charge: electronics, engineering goods, and pharmaceuticals. These sectors represent areas where India has developed significant capabilities and competitive advantages. Finally, the broader context of global supply chain shifts, accelerated by events like the COVID-19 pandemic and geopolitical tensions, coupled with India's improving business environment (e.g., ease of doing business reforms, infrastructure development), provides a strong tailwind for export growth.

**Key Stakeholders Involved:** The primary stakeholder is the **Government of India**, particularly the Ministry of Commerce and Industry, which formulates the Foreign Trade Policy (FTP) and negotiates trade agreements. The FTP 2023, for instance, aims to make India a significant player in global trade by 2030. **Indian exporters and businesses** across various sectors are the direct beneficiaries and drivers of this growth, innovating and adapting to global demands. **Trading partners** like the UK, Oman, New Zealand, and the USA play a crucial role through their demand and trade policies. International bodies like the **World Trade Organization (WTO)** provide the multilateral framework for global trade, influencing India's approach to trade liberalization and dispute resolution.

**Why This Matters for India:** This export momentum is profoundly significant for India. Economically, robust exports contribute directly to **GDP growth**, create **employment opportunities**, and help improve India's **Balance of Payments (BoP)** by boosting foreign exchange earnings and potentially reducing the Current Account Deficit (CAD). It strengthens the 'Make in India' initiative by providing a global market for domestically manufactured goods, thereby fostering industrial growth and technological advancement. Politically, a strong export performance enhances India's **global standing** and its bargaining power in international forums. It also promotes **economic diversification**, making India less vulnerable to fluctuations in specific domestic sectors or import dependencies. Socially, increased economic activity translates into better living standards and poverty reduction.

**Historical Context and Broader Themes:** India's journey from a largely closed economy to an aspiring global trade powerhouse is a testament to its evolving economic philosophy. Post-1991 reforms initiated a shift from inward-looking policies to outward-oriented growth. This current export push aligns with broader themes of **economic liberalization**, **globalization**, and India's aspiration to become a $5 trillion economy. It also reflects a strategic response to global economic shifts, emphasizing resilience and diversification. The government's focus on manufacturing through schemes like the Production Linked Incentive (PLI) scheme directly supports export-oriented industries.

**Future Implications:** The sustained export growth projected has several implications. It could lead to further **diversification of India's export basket** and markets, reducing reliance on a few key destinations or products. This might encourage more **Free Trade Agreements (FTAs)** with other strategic partners, further integrating India into global value chains. However, challenges remain, including potential global economic slowdowns, rising protectionism in some advanced economies, and the need for continuous improvement in domestic infrastructure and logistics to maintain competitiveness. India's ability to navigate these challenges while capitalizing on its demographic dividend and technological prowess will determine the long-term sustainability of this export momentum.

**Related Constitutional Articles, Acts, or Policies:** While the Constitution of India primarily deals with internal trade (Articles 301-307 ensuring freedom of trade, commerce, and intercourse throughout the territory of India), the framework for foreign trade is primarily governed by specific legislation and policies. The **Foreign Trade (Development and Regulation) Act, 1992**, empowers the Central Government to formulate and implement the **Foreign Trade Policy (FTP)**, which outlines the strategies and incentives for exports and imports. The **Customs Act, 1962**, governs the levy and collection of customs duties on imports and exports. Government initiatives like the **Make in India** program and various **Production Linked Incentive (PLI) schemes** are policy tools directly aimed at boosting domestic manufacturing and making Indian products globally competitive, thus directly supporting export growth.