India's total merchandise and services trade rose 5.4 per cent year-on-year during January–March 2026 (Q4 FY2025–26) to reach $1.84 trillion, according to the NITI Aayog 'Trade Watch Quarterly' report released on Tuesday, 23 June in New Delhi. The figures reflect a broadly stable external sector performance despite persistent uncertainties in global markets.

Key Trade Figures

For the full financial year FY2025–26, India's total trade touched $1.84 trillion, with exports growing 4.2 per cent and imports rising 6.5 per cent. The report was released by Ashok Kumar Lahiri, Vice-Chairman of NITI Aayog, in the presence of the organisation's CEO and other senior officials.

While merchandise exports moderated and imports increased, the composition of trade remained broadly stable. Services trade emerged as the standout performer, with exports growing at 9 per cent — outpacing import growth and sustaining a strong services surplus. India retained its position as the world's eighth-largest services exporter in 2025, with services exports recording a compound annual growth rate (CAGR) of 10.3 per cent during 2015–2025, significantly above the global average.

Pharmaceutical Sector in Focus

The quarterly report's thematic spotlight falls on India's pharmaceutical sector, which it identifies as a strategic pillar of the economy. Global pharmaceutical and Active Pharmaceutical Ingredients (API) demand is estimated at approximately $1.3 trillion in 2025, and India exported pharmaceutical and API products worth $35.8 billion during the same period.

India's export strength remains concentrated in formulations — particularly retail medicaments and generic drugs — where it has established a strong global presence. The country continues to play a significant role in global healthcare supply chains, supported by capabilities in generic medicines, vaccines, and essential drugs. However, its share in global pharmaceutical trade remains modest, indicating significant room for expansion.

Challenges and Structural Gaps

The report identifies a critical structural gap: the global pharmaceutical industry is increasingly shifting towards high-value segments such as biologics, immunologicals, and advanced therapeutics, where India's participation remains limited. In APIs, while India has strengthened its position in specialised chemical intermediates and antibiotics, it continues to face dependence on imported raw materials and intermediates — particularly from China.

This import reliance is flagged as a supply chain vulnerability that could constrain India's ambitions in the sector. Notably, the three states of Telangana, Gujarat, and Maharashtra together drive a significant share of India's pharmaceutical production, exports, and global value chain integration, underpinned by cluster-based manufacturing ecosystems and supportive policy frameworks.

The Road Ahead

The NITI Aayog report argues that India is well-positioned to deepen its role in global pharmaceutical value chains, with opportunities to expand into biologics, biosimilars, and advanced therapeutics. Sustained investment in research and development, technology, skills, and regulatory efficiency — alongside improved market access in key export destinations — could support higher value addition and reinforce India's standing as a leading global pharmaceutical manufacturing hub.

With services trade acting as a structural buffer and pharmaceuticals identified as the next growth frontier, India's external sector trajectory heading into FY2026–27 will hinge on how quickly it can reduce upstream import dependence and move up the pharmaceutical value chain.