Diversification gains: On India and its export competitiveness

India’s export performance in April 2026 has been commendable, underscoring the attempts by the government and industry to diversify in times of crisis. Despite the various trade disruptions, merchandise exports grew nearly 14% in April 2026 to $43.6 billion. Some of this, as even the Commerce Secretary has acknowledged, is due to the overall rise in prices. Another significant factor has been the increase in the number of markets served by Indian exporters. According to government data, at least 20 exporting sectors have added 17 or more new destinations in the last year. For example, handloom products are now exported to 29 more countries than in 2024-25. The additional exports thus generated are still small, but establishing these pathways is vital progress. The data also show that several of India’s key export sectors — engineering goods, petroleum products, electronic goods, drugs and pharmaceuticals, and organic and inorganic chemicals — exported more in April 2026 than in the same month last year. This suggests resilience in these supply chains, and the establishment of new ones. Another test of the strength of India’s export growth is to remove the effect of petroleum products and their inflated prices from the mix. Here, too, India has performed reasonably well. India’s non-oil exports grew 9% in April 2026 to about $40 billion. Notably, India’s merchandise export growth also outpaced the growth of its imports at 9.9%.

That said, the impact of the West Asia crisis is clear. Exports to West Asia fell by 28% in April, following up on an even larger contraction in March. Imports from the region, too, fell about 32%. This is a vital trade link for India and gains in other regions are not yet enough to outweigh the losses here. Imports of the safe-haven asset gold jumped 82% in April, which is perhaps what prompted the Prime Minister to urge Indians to stop buying gold, and the government to hike the import duty. Another highlight of the data is the continued rise in the significance of the services sector. The share of services in total exports has risen to about 49% compared to 39% in 2014. Rather than a reason for complacency, this should make the government take note. Any loss of a competitive edge in IT services, especially, due to the rise of Artificial Intelligence, will be an increasingly costly loss to India. Overall, however, the government’s push for diversification of export destinations — including through concerted activity to seal various trade deals — seems to be bearing fruit. Now, if only it could also improve export competitiveness in terms of cost, scale, and quality, India would really become a global contender.