India Posts Resilient Trade Growth in Q3 FY25 as NITI Aayog Highlights US Tariff Shifts

On July 14, 2025, Dr. Arvind Virmani, Member of NITI Aayog, officially released the third edition of Trade Watch Quarterly for Quarter 3 of the financial year 2025 (October–December 2024) in New Delhi. The latest edition, a flagship analytical report, captures India’s evolving trade landscape amidst a complex international environment shaped by shifting geopolitics, trade alignments, and tariff realignments, especially in the United States.

The publication delivers a dual focus: a detailed macroeconomic assessment of India’s trade data for Q3 FY25 and a deeply analytical thematic section examining how recent developments in U.S. trade policy may impact India’s global trade competitiveness.

Quarterly Trade Performance: Cautious Optimism Amid Geopolitical Flux

India’s trade performance in Q3 FY25 reflected a delicate but persistent resilience. Merchandise exports witnessed a modest growth of 3%, reaching $108.7 billion, while merchandise imports grew 6.5%, rising to $187.5 billion. Despite a growing trade deficit in goods, India’s strength in the services sector provided an effective counterbalance.

India achieved a remarkable services trade surplus of $52.3 billion, underpinned by a 17% surge in services exports. This reinforced India’s stature in the global services economy and highlighted the strategic advantage the country holds in digitally delivered services (DDS), which exceeded $269 billion in 2024. India’s position as the fifth-largest exporter of DDS globally reflects the sector’s central role in economic diversification and trade resilience.

The composition of exports remained broadly consistent with past trends, though with some notable new entrants. High-tech products such as aircraft, spacecraft, and related parts entered the top ten export categories, exhibiting a striking 200% year-on-year growth. Similarly, India's high-tech merchandise exports, led by segments like electrical machinery and arms/ammunition, have recorded a robust compound annual growth rate (CAGR) of 10.6% since 2014, demonstrating the impact of Make-in-India and technology-linked trade strategies.

Thematic Focus: U.S. Tariff Realignment and India’s Strategic Advantage

The standout feature of this quarter’s Trade Watch is a thematic analysis titled “Rebalancing the Trade Chessboard: Implications of U.S. Tariff Realignment”. This section addresses the recent shifts in U.S. tariff structures aimed at recalibrating trade dependence, particularly with key Asian economies.

India’s exporters now find themselves in a unique position. With relatively lower tariffs in comparison to major competitors such as China, Vietnam, and Mexico, India is well-placed to seize increased market share in the U.S. — particularly in pharmaceuticals, textiles, auto components, and electrical machinery. These sectors are likely to benefit from favorable tariff differentials, as well as a growing alignment between U.S. strategic sourcing goals and India’s manufacturing strengths.

However, the report cautions that taking full advantage of these opportunities will require proactive policymaking, faster logistics reforms, and stronger institutional mechanisms to promote sector-specific export growth.

Dr. Virmani: Trade Strategy Must Evolve with Global Realities

Speaking at the release event, Dr. Arvind Virmani congratulated the authors and editorial team for their “sharp analytical depth and timely insight,” emphasizing that India’s evolving trade engagement mirrors the deeper structural transformation of the economy.

He noted, “In the face of global trade disruptions caused by geopolitical tensions, technological innovation, and policy uncertainty, India’s export ecosystem is demonstrating both adaptability and ambition. This edition of Trade Watch Quarterly is not just a retrospective report — it is a strategic guide for the road ahead.”

Dr. Virmani also highlighted how India’s increasing competitiveness, innovation in export sectors, and alignment with shifting global supply chains — particularly those linked to the United States — are pivotal for long-term trade sustainability. He emphasized that this phase of trade expansion is driven not by low-cost advantages but by value addition, digitalization, and strategic diplomacy.

Policy Recommendations and Strategic Pathways

The report concludes with forward-looking recommendations that aim to optimize India’s trade positioning:

• Policy Agility: Rapid response to shifting trade patterns and geopolitical developments.

• Export Diversification: Promotion of high-tech and green exports to reduce vulnerability to demand shocks.

• Market Intelligence Systems: Strengthening data-driven tools to support exporters.

• Tariff and Regulatory Reforms: Addressing internal bottlenecks to maintain external competitiveness.

• Strategic Diplomacy: Deepening trade ties with the U.S., EU, and Indo-Pacific markets through focused trade agreements.

Navigating Complexity with Confidence

The Q3 FY25 edition of Trade Watch Quarterly underscores India’s maturing trade ecosystem, where services trade is emerging as a powerful pillar, and high-tech and digitally-enabled exports are setting new benchmarks. As the global trade architecture undergoes realignment, the report calls for policy nimbleness and strategic engagement to consolidate India’s place in emerging global value chains.

This edition will serve as a valuable resource for policymakers, industry experts, and scholars seeking to understand not only where India’s trade stands today but where it is headed tomorrow.