Trade Watch - Quarter (April to June [Q1] of the 26th Fiscal Year)
QUARTERLY THEMATIC ANALYSIS:AUTOMOTIVE EXPORTS April - June (Q1 FY26) TRADE WATCH QUARTERLY, Quarterly Report for the FY26 Copyright@ NITI Aayog, 2026 Published: January, 2026 NITI AayogGovernment of IndiaSansad Marg, New Delhi-110001, India TRADE WATCH QUARTERLY April-June (Q1) FY26 New Delhi ADVISORY BOARD EXECUTIVE SUMMARY Global trade in goods and services maintained its momentum in April–June 2025,expanding by about 2.5% quarter-on-quarter. The upturn was driven mainly bydeveloping economies and rising South–South trade, even as the United States India’s overall trade position in Q1 FY26 remained stable, with total merchandise andservices trade reaching $439 bn, growing 3.5% y-o-y. Services continued to drive theexpansion, with exports rising 10% and contributing to a large surplus of $48 bn.Goods exports declined 2.1% to $112 bn, reflecting low global demand and sector- India’s trade performance in Apr–Jun 2025 reflects a structural shift, with high-tech andcapital-goods segments driving resilience amid weakness in petroleum and labour-intensive exports. On the import side, a parallel reorientation toward electronics,machinery, and chemicals signals deeper integration into global value chains andongoing manufacturing upgrading. Complementing these trends in goods trade, The thematic focus of this quarter’s edition is India’s automotive exports, a sector withgrowing global relevance and integration into international value chains. Globally, theautomotive import volume is valued at $2.2 trillion in 2024, with India contributing~$30 bn in exports which accounts for 1.4% of the world demand. India’s automotive India’s automotive industry has grown, with a primary focus on catering to thedomestic market and a tariff regime that promotes domestic manufacturing andsales. While applied tariffs remain high and intra-industry trade is currently limited,export patterns reflect clear areas of specialisation, offering a strong base for futurediversification and deeper integration into global automotive value chains. India’s Trade Watch April-June (Q1) FY26 To enhance competitiveness and global positioning, India needs strategic measuresthat include reducing tariffs, boosting two-way trade and cross-border platformparticipation, and reorienting production toward high-demand segments suchas passenger vehicles. Strengthening quality standards, certification systems, and HIGHLIGHTS 1.In Q1 FY26, India’s goods and services exports reached $209 bn and imports $230bn, each expanding by around 3–4% y-o-y, registering a combined deficit of $21 2.In Q1 FY26, exports increased to the USA, China, and Germany but declined to theNetherlands and the UK due to lower petroleum and smartphone shipments;On the import side, the share sourced from the top four partners increased from 3.Technology-intensive sectors,electronics,machinery,and chemicals,nowanchor India’s trade performance. Electronics exports surged 47% y-o-y, lifting 4.Creative services exports reached $1.5 trillion in 2023 (19% of global services trade),dominated by software and R&D, with India ranking fourth globally, highlighting 5.Since 2015, India’s share in the global automotive import market has remainedbroadly at around 1%, with export growth of 3.5% CAGR, slightly below the 6.While the global auto-components market grew modestly to $856 bn in 2024(3% CAGR since 2015), India’s exports nearly doubled from $8.2 bn to $16.9 bn,recording a faster 7% CAGR over 2015–24. This outperformance was driven bystrong export growth in vehicle parts, rubber components, engine parts, and 7.Germany, Mexico, the US, and China together account for $395 bn, or about30%, of global automotive exports, with distinct specialisations by Germany inpassenger vehicles and parts, by Mexico in other motor vehicles and tractors by 8.India shows low two-way trade in final vehicles,reflecting niche exportspecialisation,but records higher intra-industry trade in auto components, 9.While global EV imports surged nearly 30 times between 2020 and 2024,India’s participation remains negligible at ~0.1% of global exports and imports, 10.India needs to enhance export competitiveness by rationalising incentives andcorrecting cost distortions, expanding export-linked financing for emerging 11.India must deepen market access through targeted trade diplomacy and schemerecalibration by addressing non-tariff barriers via MRAs and customs cooperation,strategically leveraging FTAs and Lines of Credit in priority markets, and mid- A. India’s Trade Analysis.......................................................................................................................................1 1. Merchandise and Services Analysis.......................................................................................................22. Compositional Analysis.................................................................................................................................33
