The changes in India’s exports and imports | Number Theory

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The first part of this series looked at the importance of exports and imports in India’s economy overtime and also compared it with other major economies. The concluding part will look at India’s goods and services trade in a more disaggregated manner.

Representational image. (Unsplash)

The changes in India’s exports and imports

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  India’s oil trade deficit is now smaller than its non-oil goods trade deficit

  The fact that India does not have adequate domestic reserves of petroleum is a major reason for its merchandise trade deficit. However, it is neither the only nor, more importantly, the biggest reason for the country’s merchandise trade deficit today. Disaggregated trade data from the Centre for Monitoring Indian Economy (CMIE) database, when read with India’s GDP data shows this clearly. Deficit in petroleum merchandise trade was larger than India’s non-oil trade deficit till the mid-2010s However, the non-oil trade deficit has caught up and, in some years, even overtaken the oil trade deficit since. This underlines the importance of reading India’s trade patterns in more granular detail.
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  How India’s trade basket has evolved

  In the early 1990s, India’s export basket was dominated by agricultural products, textiles and garments, and a modest volume of engineering goods. Petroleum products were a negligible share. By 2024-25, engineering goods have emerged as the single largest export category (over $109 billion), followed by chemicals and related products (about $62 billion), with petroleum products and other manufactured goods also becoming major contributors. Electronic goods, virtually absent in the early 1990s, have surged to more than $40 billion, reflecting India’s growing integration into global electronics supply chains. On the import side, the early 1990s were marked by modest petroleum and chemicals imports alongside small inflows of agricultural and mineral commodities. Over the decades, however, India’s merchandise import basket has been reshaped by a massive surge in petroleum crude and products, which now dominate, as well as the growing weight of engineering and electronic goods that were once negligible. In services exports, telecommunications, computer, and information services expanded nearly eightfold since 2005 to exceed $68 billion. Travel and transport services also recorded strong growth, while financial services and insurance, though smaller, have steadily risen. This underscores a long-term shift in India’s exports from primary commodities toward higher-value manufactured and knowledge-intensive exports. Meanwhile, services imports in the mid-2000s were led by transport and travel, and over time travel has become even more prominent. Computer and information services, as well as financial services too have steadily expanded over the years.
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  To whom does India export its goods and services?

  In the early 1990s, India’s goods exports were heavily oriented toward advanced economies such as the US, UK, and Germany, with the UAE and other West Asian partners playing a smaller role. Over the past three decades, the geography of trade has further diversified. The UAE has climbed to become India’s second-largest goods market, fuelled by petroleum trade, gems and jewellery, and re-exports. The Netherlands has emerged as a critical gateway into the EU for Indian goods, particularly engineering products and chemicals, while China, barely a factor in 1991-92, rose to prominence by the 2010s before its demand eased in recent years. The United States, however, remains India’s single largest export destination for goods (over $86 billion in 2024-25) and an even more dominant market for services—especially IT and business process outsourcing—amid ongoing tensions in the broader US-India trade relationship fuelled by Trump’s tariffs. In services exports specifically, the US commands an outsized share, followed by the UK and Singapore, with smaller but growing demand from Germany and other advanced economies.