To diversify export destinations and import sources, India may need to expand trade with BRICS+ countries, according to EY India chief policy advisor DK Srivastava.
At the same time, to raise merchandise imports from the United States, India may need to substantially raise imports of crude, natural gas and defence goods, he noted in an insights piece on the company website.
The base of India’s export destinations and import sources is rather narrow, with the top ten export destinations and import sources accounting for 52.6 per cent and 60.9 per cent of India’s merchandise exports and imports respectively in fiscal 2024-25 (FY25).
The United States is India’s top export destination, accounting for nearly a fifth of its total merchandise exports in FY25. China ranks fifth with a share of 3.3 per cent.
In terms of sources of merchandise imports, China tops the list with a share of 15.7 per cent in FY25, with the United States being the fourth largest after Russia and the United Arab Emirates.
The share of Russia has increased sharply since FY22 largely attributable to the increased volume of crude oil imports.
India’s trade strategy may include broadening the spectrum of destination countries for its exports as well as source countries for its imports so as to become less vulnerable to policy changes in destination and source countries, Srivastava observed.
If India’s exports to the United States come down, it is possible that India’s imports from China may also decline to some extent. Unless exports of such commodities are diversified to markets similar to the United States, such as the United Kingdom, Australia, Canada and European countries, this interdependence may remain, Srivastava wrote.
The projections that India’s total goods and services exports and imports should reach $250 billion each by 2030 appear feasible within the framework of a suitable free trade agreement, he noted.
Maximum adjustments would be required in imports of goods, and in exports and imports of services from the United States. In these three cases, India may need a compounded annual growth rate of 20 per cent each between 2024 and 2030, he added.