Page 28 - Policy & Economic Report - July 2025

POLICY AND ECONOMIC
ROEILPO&RGTAS MARKET

while India's Reserve Position in the International Monetary Fund (IMF) decreased by US$ 0.06
billion to US$ 5.14 billion.

The resilience of India's foreign exchange reserves assumes greater significance in the current global
environment, characterised by volatile capital flows, elevated crude oil prices, persistent geopolitical
tensions and uncertainty surrounding global monetary policy. A strong reserve position provides the
Reserve Bank of India with greater flexibility to manage episodes of exchange rate volatility, maintain
orderly conditions in the foreign exchange market and cushion the economy against sudden external
shocks. It also enhances India's external creditworthiness by strengthening the country's ability to meet
external debt obligations and finance imports even during periods of heightened global uncertainty.

External Trade Developments

India's external trade sector continued to demonstrate resilience during June 2026, despite persistent
geopolitical tensions, elevated crude oil prices and continued uncertainty in the global trading
environment.

Total exports (merchandise and services combined) were estimated at US$ 73.45 billion, registering a
growth of 9.48 per cent compared with US$ 67.09 billion in June 2025. Total imports increased to US$
88.76 billion, reflecting a year-on-year growth of 26.85 per cent, primarily driven by higher merchandise
imports, particularly petroleum products and industrial raw materials. During the first quarter of FY 2026–
27 (April–June), cumulative exports increased by 11.37 per cent to US$ 232.73 billion, while imports grew
by 17.55 per cent to US$ 270.15 billion, indicating continued resilience in India's external sector despite a
widening trade deficit.

Merchandise exports during June 2026 increased to US$ 40.41 billion from US$ 34.98 billion in June 2025,
registering a robust growth of 15.51 per cent. Non-petroleum exports also remained resilient, increasing
by 16.48 per cent to US$ 35.54 billion, while cumulative non-petroleum exports during April–June 2026–
27 rose by 12.36 per cent to US$ 106.30 billion. Exports excluding petroleum and gems & jewellery
increased by 15.33 per cent to US$ 33.13 billion, highlighting the broad-based nature of India's export
growth and the continued strength of manufacturing and value-added sectors.

The growth in merchandise exports was led by gems & jewellery, engineering goods, organic & inorganic
chemicals, electronic goods and rice. Gems & jewellery exports recorded the highest increase among the
major export categories, rising by 34.64 per cent from US$ 1.79 billion in June 2025 to US$ 2.41 billion in
June 2026. Engineering goods exports increased by 20.74 per cent to US$ 11.32 billion, reaffirming the
competitiveness of India's manufacturing sector. Exports of organic & inorganic chemicals increased
by 19.42 per cent, while electronic goods recorded a growth of 18.93 per cent, reflecting continued
expansion in domestic electronics manufacturing. Rice exports also increased by 16.48 per cent, while
positive growth was observed in iron ore, meat, dairy & poultry products, marine products, drugs &
pharmaceuticals, and petroleum products.

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