Navigating India's Trade Landscape: What Investors and Entrepreneurs Need to Know in FY25

In a year of changing global trade winds and geopolitical tension, India's FY25 trade performance is a story of nuance — one of opportunity, prudence, and strategic rebalancing.

For Indian exporters and businesses, the good news is unequivocal: March witnessed an astonishing export surge to the US, reaching an all-time high of $86.51 billion for the period, with more than $10 billion worth of goods exported in March itself. This 35% year-over-year surge most probably resulted from a strategic binge of front-loading shipments prior to the April 2 imposition of tit-for-tat tariffs. Although this action powered monthly volumes, it also revealed the profound volatility associated with changes in global policy.

Concurrently, Chinese imports to India reached an all-time high of $113.45 billion, highlighting India's ongoing dependence on Chinese inputs, particularly for electronics, industrial equipment, and capital machinery. As Ajay Srivastava of GTRI has aptly noted, it is not a mere trade deficit; it is a structural dependency that compromises India's long-run competitiveness.

For business owners in industries such as electronics, the silver lining is that exports jumped by 32% to $38 billion, led by booming iPhone production. India's efforts to emerge as a world electronics hub are paying off, but the dependency on Chinese inputs because of PLI schemes has to be rethinked with a sense of urgency.

Just as significant, India's services exports also grew a robust 12.45% to $383.51 billion, contributing to a healthy surplus. For IT, consulting, and financial services startups and MSMEs, this is a solid growth sector, comparatively shielded from tariff wars.

But it wasn't smooth sailing all the way. Old strongholds such as gems and jewellery, handicrafts, and chemicals recorded export falls, while engineering goods, a large segment, suffered a monthly fall of 4% in March. With the US imposing further duties on auto parts and steel, engineering exports are facing severe headwinds. Industry captains are sounding an alarm of a possible $4 to 5 billion annual falls in shipments to the US.

And then there is the China factor once again. India's exports to China dropped 14.5% in FY25 to $14.2 billion, even below the levels of more than a decade ago. It says a lot about our declining competitiveness in one of the biggest markets in the world.

But in times of adversity, niche opportunities cropped up. Exports of coffee jumped 40% with international price surges, while food-related industry sectors ranging from cereals to processed foods posted consistent growth. For agri-exporters and FMCG companies, this may be the moment to double down.

Looking ahead, the WTO has published a sober forecast: world merchandise trade is predicted to contract by 0.2% in 2025. The warning is unequivocal. Uncertainty will remain a heavy burden on world commerce.

What can Indian investors and entrepreneurs do?

• Diversify export destinations: As the US and China become battlegrounds of tariff diplomacy, markets in Africa, Latin America, and the Middle East are opening up. Be early, be nimble.

• Reduce input dependence: Localize supply chains where feasible, especially for electronics and industrial components.

• Invest in services and IP-driven exports: Software, fintech, and R&D-led exports are less vulnerable to tariff volatility.

• Stay policy-aware: In a world where trade norms shift overnight, being agile is not a choice, it is a strategy.

  
  

In an era of unpredictability, resilience will be built not by reacting, but by preparing. India's trade journey in FY25 is a wake-up call, one that smart entrepreneurs will use to future-proof their business plans.