India's Trade Performance and Challenges in FY25

In the context of global geopolitical tensions and shifting tariffs under the Donald Trump administration, India faced several trade challenges. Despite these, significant developments in trade agreements, like the conclusion of the India-UK Free Trade Agreement and ongoing negotiations with the US, marked the year.

Overall Trade Performance

• Total exports rose to $820.93 billion in FY25, a 6.5% increase from FY24.
• Merchandise exports accounted for $437.42 billion (53%), while services contributed $383.51 billion (47%).
• Imports increased by 6.85% to $915.19 billion.
• Merchandise imports were $720.24 billion (79%), while services accounted for $194.95 billion (21%).
• The trade deficit increased to $94.26 billion from $78.39 billion in FY24.
• India's trade-to-GDP ratio was 41.4%, reflecting a strong link with global markets.

Agriculture Sector

• Agri-exports rose to $52 billion in FY25, a 6.3% increase.
• Growth is modest compared to previous years (20% annual growth from FY05 to FY14).
• Issues such as domestic trade policies and global price trends affect export momentum.

Key Agricultural Exports

• Rice was the top agricultural export, with 20.2 MMT worth $12.5 billion.
• Other significant exports: marine products ($7.4 billion), spices ($4.5 billion), buffalo meat ($4.1 billion).

Rice Export Controls

• India restricted certain rice exports, affecting global rice prices.
• Post-restriction, rice exports rebounded to 20.2 MMT, earning $12.5 billion in FY25.

Challenges and Strategies

• Heavy subsidies in rice production (water, electricity) raise sustainability concerns.
• Need for productivity improvements via R&D, better seed technology, and resource-efficient practices.

Agri-Imports

• Agri-imports increased by 16.5% to $38.2 billion.
• Edible oils, primarily palm oil, constituted $17.3 billion of total agri-imports.

Strategies for Sustainability

• Focus on domestic oil palm cultivation as a sustainable alternative.
• Government support needed during the gestation period of oil palm cultivation.

The analysis highlights the importance of a consistent trade policy and sustainable productivity investments to enhance India's agriculture sector on a global scale.