Trade Watch Quarterly Q2 FY26 Released: NITI Aayog Flags Electronics as India’s Next Export Growth Engine

Shri Suman Bery, Vice-Chairman, NITI Aayog, today released the latest edition of the "Trade Watch Quarterly" publication for Quarter 2 of FY 2025–26 (July–September 2025) in New Delhi. The report was launched in the distinguished presence of Member, NITI Aayog, Dr. Arvind Virmani, along with senior officials and experts.

The quarterly publication offers a timely, data-driven assessment of global and domestic trade dynamics at a moment when world trade growth has moderated but remains resilient, driven increasingly by services, developing economies, and new digital trade channels.

This edition's thematic focus on India's electronics trade highlights the sector's emergence as a strategic pillar of India's manufacturing transformation, export ambitions, and integration into global value chains.

Global Trade Moderates, Services Lead Growth

The report notes that while global trade growth has slowed amid persistent geopolitical and economic uncertainty, it continues to remain positive. A key structural shift is the continued outperformance of services trade over goods trade, with developing regions emerging as major drivers of global demand.

The analysis also underscores the rapid deepening of trade linkages among developing economies. Trade among these nations has expanded nearly four-fold since 2005, now accounting for a rising share of world exports. India's trade trajectory is increasingly aligned with this Global South rebalancing, supported by regional value chains and new trade corridors.

India's Q2 FY26 Trade Performance Driven by Export Momentum

Despite heightened global uncertainty, India's trade performance in Q2 FY26 reflected strong export-led resilience. Both merchandise and services exports recorded robust growth of around 8.5%, outpacing import growth across categories.

This sustained momentum highlights India's strengthening position in global markets, supported by diversification in products, markets, and trade-enabling ecosystems.

E-Commerce Emerges as a Future Export Catalyst

A major forward-looking insight in this edition is the growing role of e-commerce as a driver of India's next export wave. India is now among the world's top six e-commerce markets, with electronics accounting for nearly half of online retail activity.

Although e-commerce exports remain modest today, the report projects that they could scale rapidly, contributing 20–30% of India's merchandise exports by 2030, supported by improvements in logistics efficiency, regulatory facilitation, and greater MSME participation in cross-border digital trade.

Electronics: Cornerstone of India's Export Transformation

The thematic section positions electronics as one of the most strategic sectors shaping India's industrial future. Electronics is now the second-largest item in India's export basket, with strong linkages to automotive manufacturing, renewable energy systems, telecom infrastructure, defence production, and digital services.

The sector's rapid rise reflects both technology intensity and multiplier effects across the broader economy.

India's Electronics Demand and Exports Surge

India's share in global electronics demand has expanded at an exceptional pace, growing at a CAGR of 17.2% between 2015 and 2024, far above the global growth rate of 4.4%.

Driven primarily by the sharp rise in mobile phone exports, India's electronics exports increased nearly five-fold between 2016 and 2024, reaching USD 42.1 billion.

With global electronics trade valued at approximately USD 4.6 trillion, the sector remains one of the world's largest and fastest-evolving segments, offering India significant room for export expansion.

India has demonstrated particular strength in products such as:

• Mobile phones

• Consumer electronics

• Communication equipment

Exports are increasingly directed toward major final-consumption markets, including the United States, the United Kingdom, and the UAE.

Moving Beyond Assembly Toward High-Value Components

The report notes that India has established a strong foothold in final assembly and system integration, and is now entering the next phase of its electronics journey: component manufacturing and higher domestic value addition.

This transition is supported by targeted policy measures, including the Union Budget's ₹40,000 crore allocation under the Electronics Components Manufacturing Scheme, aimed at strengthening domestic capabilities and reducing import dependence.

Strengthening Competitiveness Through Global Value Chain Integration

The analysis identifies sustained competitiveness as dependent on deeper integration into global electronics value chains, including:

• Printed circuit board design

• Semiconductor assembly and testing

• Power electronics

• Embedded systems

Complementary reforms in logistics efficiency, tariff rationalisation, and industry-aligned skill development are highlighted as essential to positioning electronics as a key engine of India's export growth and technological advancement over the coming decade.

Leadership Remarks

Addressing the occasion, Vice-Chairman Shri Suman Bery stated:

"Electronics, as the organising core of modern manufacturing value chains, with semiconductors and components, plays a key role in determining trade balances and technological sovereignty. While India has achieved scale in final assembly, sustained competitiveness will depend on correcting structural cost disabilities, deepening domestic component ecosystems, and leveraging anchor investments in components to embed Indian firms more firmly within global production networks."

Member, NITI Aayog, Dr. Arvind Virmani also commended the team for delivering a timely and analytically robust edition, noting that deeper integration into global value chains will be central to sustaining export momentum, enhancing productivity, and generating quality employment.

A Resource for Policymakers and Industry

The edition serves as an important reference for policymakers, industry leaders, researchers, and academia, providing forward-looking insights to strengthen India's trade competitiveness in an evolving global landscape.

The full publication can be accessed here:https://niti.gov.in/sites/default/files/2026-02/Trade-Watch-Quarterly-July-September-Q2-FY-2025-26.pdf