India's Merchandise Exports Set to Grow in Q3 FY25, Exim Bank Projects

India's merchandise exports are expected to rise by 1.85% year-on-year (YoY) in the third quarter of the financial year 2025 (FY25), according to projections from India Exim Bank. The total value of exports for the October-December period is forecast to reach $107.5 billion, up from $104.61 billion in the same quarter last year.

Growth in Non-Oil Exports

Exim Bank has specifically projected that non-oil exports will reach $91.7 billion, showing a growth of 7.39% compared to the same period last year. When excluding oil and gems and jewelry, non-oil, non-gems, and jewelry exports are expected to hit $82.7 billion, reflecting a stronger 7.8% YoY increase. This positive outlook indicates that India’s exports are bouncing back, even amidst global economic uncertainty.

Reasons behind the Growth

The anticipated rise in exports signals a steady recovery driven by India's strong economic fundamentals. Moreover, demand from key trading partners remains stable, which is supporting the growth. There is also the possibility of global monetary policy easing, which could further help improve the export environment.

Risks to Watch Out For

Despite the optimistic outlook, Exim Bank has warned that 

several external risks could affect the export performance. These include:

• Uncertainties in both advanced and emerging economies
• Rising geo-economic tensions, particularly in the Middle East and West Asia
• Potential protectionist policies in major markets
• Ongoing disruptions in global supply chains

Q4 FY25 Outlook

Looking ahead, Exim Bank believes that the positive momentum in India’s total merchandise exports, as well as non-oil and non-oil, non-gems exports, will continue into the fourth quarter of FY25 (January-March).

India’s Trade Deficit Narrows

India's trade deficit, which is the difference between its exports and imports, has been improving. In September, the deficit narrowed to a five-month low of $20.78 billion, down from $29.65 billion in August. However, the decline in exports compared to earlier months shows that the growth trend is still fragile. Imports, too, decreased to their lowest level since May, pointing to weaker demand in the economy.

Trade Deficit over the Last Few Months

India’s trade deficit has been fluctuating in recent months.

• September: $20.78 billion
• August: $29.65 billion
• July: $23.5 billion
• June: $20.98 billion
• May: $23.78 billion
• April: $19.1 billion

Quarterly Export Performance

India's export performance in the first half of FY25 shows mixed results:

• Q1 FY25: Exports were $109.11 billion.
• Q2 FY25: Exports were $102.34 billion.

In comparison, exports in the same quarters of FY24 were:

• Q1 FY24: $101.87 billion
• Q2 FY24: $107.5 billion

Future Export Projections

Exim Bank’s export growth projections are updated quarterly—every May, August, November, and February. These updates are based on the Export Leading Index model, which uses domestic and global indicators to assess future export trends. The next set of forecasts for Q4 FY25 will be released in early February.

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SUMMARY

India's merchandise exports are expected to grow by 1.85% year-on-year (YoY) in the third quarter of FY25 (October-December), reaching $107.5 billion, according to projections by India Exim Bank. Non-oil exports are forecast to rise by 7.39%, while non-oil, non-gems, and jewelry exports could grow by 7.8%. The growth is attributed to India's strong economic fundamentals and stable demand from key trading partners, though risks like global economic uncertainties and geopolitical tensions remain. India’s trade deficit narrowed to $20.78 billion in September, a five-month low, driven by a rise in exports and a decline in imports. However, the export momentum is fragile, as seen in the sequential declines in recent months. Exim Bank's export growth forecasts are updated quarterly, with the next forecast for Q4 FY25 due in February.