Merchandise exports set for modest rebound, to hit $107.5 billion in Q3: India Exim Bank

India's merchandise exports are likely to rise 1.85% year-on-year to $107.5 billion in the third quarter of FY25 (October-December), according to India Exim Bank. In the same period last year, goods exports stood at $104.61 billion.

Exim Bank has projected non-oil exports at $91.7 billion, marking a year-on-year (YoY) growth of 7.39%. Non-oil, non-gems, and jewellery exports are forecasted at $82.7 billion, reflecting a 7.8% YoY increase.

Read this | RITES sets sights on Africa for export of refurbished and underutilized railway diesel locos

This anticipated growth signals a modest yet steady rebound amid global economic uncertainty, driven by India’s strong fundamentals and stable demand from key trading partners. Potential global monetary policy easing could further support the export environment.

However, Exim Bank cautions that external risks persist, including uncertainties in advanced and emerging economies, rising geo-economic fragmentation, crises in the Middle East and West Asia, potential protectionist policies, and ongoing supply chain disruptions.

The positive momentum in total merchandise, non-oil, and non-oil, non-gems, and jewellery exports is expected to extend into Q4 FY25, according to Exim Bank.

“The export forecast for this quarter is only slightly higher than last year’s, but when looked at on a monthly basis, it’s clear that real growth is not happening,” said Pronab Sen, an economist and former chief statistician of the country.

“There’s no substantial increase; the growth we’re witnessing is far below what was anticipated. For an economy targeting a 7% growth rate, exports should ideally grow by 14-16%. However, exports are not reflecting this pace. Although numerous factors are affecting exports, a slowdown in the global economy isn’t one of them. The global economy is, in fact, holding steady. We need to take a closer look at why our exports are struggling to gain momentum,” Sen told Mint.

India's goods trade deficit narrowed to a five-month low in September, buoyed by a modest rise in exports. However, sequential declines indicate that momentum remains fragile. Imports also hit their lowest level since May, reflecting softer demand.

India's trade deficit—the gap between exports and imports—stood at $20.78 billion in September, down from $29.65 billion in August. It was $23.5 billion in July, $20.98 billion in June, $23.78 billion in May, and $19.1 billion in April.

India’s goods exports reached $109.11 billion in Q1 FY25 and $102.34 billion in Q2, compared to $101.87 billion in Q1 FY24 and $107.5 billion in Q2 FY24.

Also read | Opinion: No major threat to Indian exports to US

Exim Bank’s quarterly export growth forecasts are updated in May, August, November, and February for each corresponding quarter. These projections are based on the bank's Export Leading Index model, which gauges export outlooks using domestic and global indicators. The next forecast for Q4 FY25 (January-March) is expected in early February.