New Delhi, May 29: India is expected to witness a significant rise in its total merchandise and services exports, projected to cross $1 trillion in FY 2025–26, up over 21% from $825 billion recorded in the previous fiscal year.
The increase is primarily driven by rising exports to the United States and diversification in global sourcing trends. Ongoing free trade agreements are also contributing to this growth by enhancing India’s competitiveness in international markets.
Despite the positive outlook, certain technical and non-tariff barriers are anticipated to pose challenges. A major upcoming regulatory shift is the Digital Product Passport (DPP), which will be implemented by the European Union from January 1, 2026. The DPP will initially apply to sectors like electronics, batteries, textiles, and construction materials, and will eventually expand to a wider range of products by 2030.
The DPP aims to digitally track and share a product’s entire lifecycle—from raw materials and manufacturing to usage, recycling, and disposal. While the initiative focuses on sustainability, it is expected to create additional compliance burdens, especially for Micro, Small, and Medium Enterprises (MSMEs).
For FY 2025–26, merchandise exports are projected to increase by around 12%, reaching $525–535 billion, up from $437 billion in FY 2024–25. Similarly, services exports are expected to grow by nearly 20%, from $387 billion to $465–475 billion.
Major growth areas include electronics, engineering goods, chemicals, textiles and garments, pharmaceuticals, and agriculture. Exports of petroleum products and gems & jewellery are also expected to remain strong.
However, exporters may face increased costs and operational challenges due to new sustainability-related regulations. Failure to comply with DPP requirements could lead to shipment rejections or loss of market competitiveness in the increasingly eco-conscious EU market.
The DPP follows a series of EU regulations, including carbon tax rules, deforestation policies, and the Ecodesign for Sustainable Products Regulation, all coming into effect from January 2026.
Meanwhile, geopolitical tensions—such as those involving the Red Sea, Russia-Ukraine, and Israel-Hamas conflicts—have somewhat stabilized. Shipping activity through the Red Sea has resumed, easing earlier disruptions in trade routes.
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