India to miss $1 trillion exports target? Exports struggle despite the FTA push — Here’s what’s happening

India's ambition of exporting goods and services worth $1 trillion by the end of FY26 is likely to remain out of reach, Global Trade Research Initiative (GTRI) predicted in its latest report on Thursday, pointing to weak merchandise shipments due to weak global demand and increasing protectionist trends.Ajay Shrivastava, founder of the economic think tank, said that India is expected to record flat increase in exports this year with goods outflows showing almost no growth. Total exports in FY26 are expected to rise only to almost $850 billion, missing the $1 trillion number by $150 billion. The think tank predicted that services exports might be able to cross $400 billion, providing "the only meaningful growth cushion for India's trade," as the overall growth struggles with weak global demand. Meanwhile, Shrivastava highlighted that the target may be achieved if India succeeds in sealing major trade deals. “That I think we may achieve once our trade deal with the US and EU comes. That is maybe next year, not this year,” he said.While exports face sustained pressure, Shrivastava said that domestic economic conditions remain stable. “The domestic economy is working fine,” he said, adding, “The GDP numbers are telling; low inflation numbers are telling. The only pressure on the GDP will be the pressure on the export side.”Despite the overall slowdown, recent trade figures suggest that India has begun to diversify its export destinations. Shrivastava pointed out that exports to the United States declined sharply between May and November, even as shipments to other regions rose.Exports to the US dipped almost 21% amid President Donald Trump's 50% tariffs imposition on Indian shipments.“We have seen that between May and November, our exports to the US are down by 20.7%” he said. The report added that unless Washington rolls back the extra 25% duties on India or locks in a trade deal, "exports to India's largest market risk further erosion."For India's trade with the European Union, the think tank highlighted a difference with exports dropping even before duties came into play with the bloc's compliance and reporting requirements dragging down the country's steep shipments by almost 24%.EU will "activate its Carbon Border Adjustment Mechanism (CBAM) on January 1, 2026, effectively imposing a carbon tax on imports." From the next year, 2026, EU importers will lable Indian goods inclusive of the CBAM costs, "with payments settled through certificate surrender in 2027."Shrivastava said, “During this time, our exports to the rest of the world increased by 5.5%. That means diversification already started happening in a small way.”However, he cautioned that geographical diversification must be accompanied by changes in the composition of India’s exports. “For more diversification, for more exports to these countries, we have to focus on diversifying our export basket also,” Shrivastava said. “Right now, our export basket needs inclusion of more medium to high-tech products.” The think tank said that while the country has already signed 18 FTAs and more possible in 2026, India's priority must change, going from signing agreements to "making FTAs deliver real export gains, especially in electronics, engineering and textiles."The think tank cautioned that tariffs, climate-related taxes and geopolitical uncertainty will continue to weigh on global trade conditions. Export survival and growth will depend on competitiveness at home, including better products, deeper manufacturing capabilities and lower costs.Back in FY25, India's overall exports stood at $825 billion, including $438 billion in merchandise outflows and $387 billion in services.