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May 17, 2024

India’s Merchandise Exports Poised to Reach $500-510 Billion in FY25: FIEO

India’s merchandise exports are projected to grow significantly to $500-510 billion in the fiscal year 2025 (FY25), following a 3% decline in the previous year (FY24), according to the Federation of Indian Export Organisations (FIEO). This optimistic forecast was shared by FIEO President Ashwani Kumar, who also highlighted the potential for services exports to reach $390-400 billion. Combined, India’s total exports could hit approximately $890-910 billion, surpassing the $778 billion recorded in FY24.

Driving Factors Behind Export Growth

The anticipated growth in merchandise exports will be fueled by robust demand in traditional markets such as the United States and Europe. Key sectors expected to drive this expansion include electronics, machinery, pharmaceuticals, medical and diagnostic equipment, and other technology-driven industries. The production-linked incentive (PLI) scheme is also expected to contribute significantly to export growth, particularly in labor-intensive sectors like apparel, footwear, and gems & jewelry, which faced substantial declines in FY24.

“We will benefit from increasing incremental production under the PLI scheme, much of which will find its way to exports,” noted Israr Ahmed, FIEO’s vice president. He added that favorable monsoon forecasts might lead to the lifting of certain restrictions on cereal exports, further bolstering export volumes.

Challenges and Credit Needs

Despite the positive outlook, several challenges persist. Rising inflation, high commodity prices, and soaring sea and air freight costs have driven up the demand for credit. Additionally, longer cargo transit times and slower inventory

Jhumpa Lahiri

Jhumpa Lahiri

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