India merchandise exports to hit $131.2 bn in Q2 FY27, up 17.6%: Exim Bank
Synopsis
India Exim Bank is projecting a second consecutive quarter of record merchandise exports — $131.2 billion in Q2 FY27, up 17.6% year-on-year. With Q1 already logging an all-time high of $129.6 billion, the data suggests India's export engine is running at an unprecedented pace, powered by trade agreements, manufacturing growth, and geographical diversification — even as geopolitical risks loom.
Key Takeaways
India Exim Bank projects merchandise exports at $131.2 billion in Q2 FY27 (July–September) , up 17.6% year-on-year.
Non-oil exports forecast at $113.8 billion , rising 20.3% ; non-oil, non-gems exports at $105.8 billion , up 20.5% .
Q1 FY27 merchandise exports hit an all-time quarterly high of $129.6 billion , growing 16.1% over the previous year.
The June 2026 trade deficit of $30.4 billion was a five-month high but only marginally above the 12-month average of $29.3 billion .
Key growth drivers: geographical diversification , new trade agreements , domestic manufacturing expansion, and exchange rate movements.
Downside risks flagged: geopolitical conflicts and international commodity market volatility .
India's total merchandise exports for the July–September quarter (Q2) of fiscal year 2026–27 are projected to reach $131.2 billion, a year-on-year increase of 17.6 per cent, according to a forecast released by India Exim Bank on Wednesday, 12 August 2025. The projection builds on a record-breaking Q1 performance and points to sustained momentum in India's outbound trade despite a volatile global backdrop.
Key Projections for Q2 FY27
The India Exim Bank report forecasts non-oil exports at $113.8 billion for the quarter, representing growth of 20.3 per cent year-on-year. Stripping out gems and jewellery as well, the non-oil, non-gems and jewellery segment is projected at $105.8 billion, up 20.5 per cent — signalling that core manufactured goods are driving the bulk of the expansion.
The bank generates these quarterly forecasts using its proprietary Export Leading Index (ELI) model, which integrates both domestic and external indicators to gauge export momentum.
What Is Driving the Growth
According to the Exim Bank, the export uptick stems from increasing geographical diversification by Indian exporters, favourable prospects arising from recent trade agreements with major trading partners, and buoyant demand in partner economies. Domestic manufacturing expansion and exchange rate movements are also cited as supportive factors.
'India's positive export outlook is expected to be driven by sustained expansion in domestic manufacturing and exchange rate movements. However, there are downside risks emanating from geopolitical conflicts and volatility in international commodity markets,' the bank stated in its report.
Record Q1 Sets a High Bar
The Q2 forecast comes on the back of a historic Q1 outturn. India's merchandise exports during the April–June quarter of FY 2026–27 recorded an all-time quarterly high of $129.6 billion, compared with $111.6 billion in the same period a year earlier — a growth rate of 16.1 per cent. This data was shared with Parliament earlier this week, underlining the government's confidence in the trade trajectory.
Trade Deficit in Context
The merchandise trade deficit stood at $30.4 billion in June 2026, reported as a five-month high. However, Minister of State for Commerce and Industry Jitin Prasada told the Lok Sabha that the figure was only marginally above the 12-month average deficit of $29.3 billion, and remained broadly in line with recent trends. He added that the government closely monitors trade performance, including the merchandise trade deficit, to ensure the data is not misread as a structural deterioration.
Risks on the Horizon
Notably, the Exim Bank flagged geopolitical conflicts and international commodity price volatility as the primary downside risks to its Q2 projection. With global supply chains still adjusting to ongoing tensions in multiple theatres, and commodity markets susceptible to sharp swings, the $131.2 billion target — while well-supported by current trends — is not without headwinds. If Q2 meets the forecast, it would mark the second consecutive quarter of record-level merchandise exports for India.
Point of View
But the composition of growth matters as much as the headline number. Non-oil, non-gems exports — the cleanest proxy for manufacturing competitiveness — are growing at 20.5%, which is encouraging. Yet the Exim Bank's own model flags geopolitical and commodity risks that could compress margins even as volumes hold. The trade deficit, while within historical averages, will bear watching if global oil prices spike. India's export diversification story is real, but it remains concentrated in a handful of partner markets; a demand slowdown in the US or EU could test the resilience that recent trade agreements are supposed to provide.
NationPress
12 Aug 2026
Frequently Asked Questions
What is India's merchandise export forecast for Q2 FY27?
India Exim Bank projects total merchandise exports at $131.2 billion for the July–September quarter of FY 2026–27, a year-on-year rise of 17.6 per cent. The forecast is based on the bank's proprietary Export Leading Index (ELI) model.
What drove India's export growth in Q1 FY27?
India's merchandise exports in Q1 FY27 (April–June) hit an all-time quarterly high of $129.6 billion, up 16.1 per cent from $111.6 billion a year earlier. Growth was attributed to geographical diversification, new trade agreements, and strong demand in partner countries.
What are the main risks to India's Q2 export outlook?
India Exim Bank cited geopolitical conflicts and volatility in international commodity markets as the primary downside risks to its $131.2 billion Q2 forecast. Exchange rate movements could also swing outcomes in either direction.
Is India's trade deficit a cause for concern?
The merchandise trade deficit stood at $30.4 billion in June 2026 — a five-month high — but Minister of State Jitin Prasada told the Lok Sabha it was only marginally above the 12-month average of $29.3 billion, and broadly in line with recent trends.
What sectors are leading India's non-oil export growth?
The Exim Bank report highlights non-oil and non-gems and jewellery exports — a measure of core manufactured goods — growing at 20.5% to $105.8 billion in Q2 FY27, suggesting manufactured products are the primary engine of India's export expansion.
