New Delhi: India’s trade landscape is undergoing a profound structural reorientation. According to the latest ‘Trade Watch Quarterly’ released by NITI Aayog for the April-June (Q1) FY26 period, the nation is successfully pivoting toward technology-intensive and capital-goods segments, even as traditional labor-intensive exports face global headwinds.
While overall merchandise exports saw a marginal decline of 2.1% due to softened global demand, the services sector continued to act as a robust stabilizer. Services exports climbed 10% during the quarter, providing a critical buffer to the trade deficit.
A key highlight of the report is the thematic deep-dive into India’s automotive sector—a $2.2 trillion global opportunity. While India has established itself as a formidable player in the motorcycle segment with a 9% global export share, it remains an underdog in the passenger vehicle (PV) market.
”The asymmetry is stark,” the report notes. Passenger vehicles account for 71% of global automotive demand, yet India’s capture remains at a stagnant 1%. To bridge this gap, NITI Aayog suggests a shift from “protection toward lower input tariffs” and deeper integration into Global Value Chains (GVCs), which have already seen India’s backward integration rise from 32% in 2015 to 46% in 2024.
Beyond hardware, India is cementing its status as a “global powerhouse” in the creative economy. The report emphasizes that India’s strength now lies in digitally delivered, skill-intensive services—such as software, R&D, and digital content—whose export value has significantly outpaced creative goods.
On the import side, the reorientation toward electronics, machinery, and chemicals signals that Indian manufacturers are upgrading their capabilities and embedding themselves more firmly in international production networks.
Despite the resilience, industry stakeholders flagged several “structural constraints” during consultations.
These include:
Incentive Gaps: Current RoDTEP rates are seen as insufficient to offset high logistics costs.
EV Hurdles: While EV exports are growing, India remains heavily dependent on imports for critical battery components like lithium and cobalt.
Counterfeit Risks: Nearly 20-25% of the automotive parts market is estimated to consist of fake products, affecting brand reputation in foreign markets.