India Likely to Miss $1 Trillion Export Target by $150 Billion in FY26

India is expected to miss its ambitious $1 trillion export target in FY26, falling short by nearly $150 billion, according to a recent assessment by the Global Trade Research Initiative (GTRI). Instead of reaching the milestone, India’s total exports of goods and services are projected to come in at around $850 billion. The forecast highlights growing challenges in global trade conditions and structural limitations in India’s export ecosystem.

A key reason behind the expected shortfall is the lack of growth in merchandise (goods) exports, which form a large portion of India’s total exports. GTRI expects goods exports to remain largely flat in FY26, offering little contribution to overall export expansion. While services exports such as IT, consulting, and business services are likely to grow, that growth alone will not be sufficient to compensate for weak performance in goods shipments.

Another major factor is the global economic slowdown. Weak demand across developed economies, slower industrial activity, and lingering geopolitical uncertainties are affecting international trade flows. As a result, import demand from key global markets has softened, directly impacting export-oriented economies like India. According to GTRI, these global headwinds are limiting India’s ability to scale exports at the pace required to meet its FY26 target.

The report also points to the absence of major trade agreements as a critical constraint. Important trade deals with large economies such as the United States and the European Union are unlikely to be finalised during FY26. These agreements could have provided Indian exporters with better market access, lower tariffs, and improved competitiveness. However, since negotiations are still ongoing, any benefits from such deals are expected to materialize only after FY26.

Regional export trends further underline the challenge. Exports to the United States, one of India’s largest trading partners, declined sharply by about 20.7% between May and November, according to GTRI estimates. While exports to other global markets increased by around 5.5% during the same period, indicating early signs of geographic diversification, the gains have not been large enough to offset losses from major destinations.

GTRI emphasizes that diversifying export destinations alone is not sufficient. India also needs to diversify its export product mix, especially by increasing the share of medium- and high-technology products. Currently, a significant portion of India’s exports remains concentrated in low-value or traditional segments, limiting long-term growth potential and global competitiveness.

The report also flags limitations of multilateral groupings such as BRICS, noting that these platforms do not function like formal trade blocs such as the European Union or ASEAN. Their current structure and agenda offer limited direct support for boosting India’s exports in the near term.

Overall, GTRI’s assessment suggests that while India continues to expand its global trade footprint, structural challenges, weak global demand, and delayed trade agreements make the $1 trillion export target in FY26 difficult to achieve. The milestone may still be attainable in the coming years, but FY26 is likely to fall short of expectations.