Global trade policy shocks coupled with domestic cost pressures are likely to expose the Indian economy’s vulnerability to slowing world demand, according to trade-focused think-tank Global Trade Research Initiative (GTRI), which cited data from the latest World Trade Organization’s Goods Trade Barometer.
The WTO report, released earlier this week, according to GTRI, pointed to a marked cooling in global merchandise trade after the tariff-driven surge earlier in the year.
According to the WTO, GTRI noted, global trade held up in early 2025 on the back of strong demand for AI-related goods, but momentum is now easing as front-loading fades and protectionist pressures re-emerge.
While most components, be it electronics, air freight, container shipping and autos, continue to signal expansion, the rate of growth is slowing, and agricultural raw materials have already fallen below trend, GTRI noted.
“The warning is blunt: growth remains intact for now, but rising tariffs and policy uncertainty threaten to erode global trade volumes in 2026,” the Indian think tank has asserted.
India’s export performance in October mirrors this global deceleration, but with sharper downside risks.
Merchandise exports fell 11.8 per cent year-on-year, with declines across 15 of 20 major markets, underlining the fragility of demand facing Indian exporters.
Shipments to key partners such as the United States (-8.6 per cent), the UAE (-10.2 per cent), the UK (-27.2 per cent), Italy (-27.7 per cent) and the Netherlands (-22.8 per cent) all weakened, while steep collapses in Singapore and Australia point to a sudden loss of momentum in Asia-Pacific supply chains, GTRI noted.
India export sector growth, as per GTRI, was limited to a handful of destinations — most notably Spain and China, driven largely by energy and commodity-linked exports rather than manufacturing strength.
“As with the WTO’s global picture, India’s data suggest not a collapse but a clear loss of traction, with trade policy shocks abroad now colliding with domestic cost pressures to expose the economy’s vulnerability to slowing world demand,” GTRI concluded.