India-Middle East Trade Pact may see a tremendous increase in India’s exports.
India’s increasing proximity with the Middle East may show its impact in the next one year. Due to which India’s exports can cross $950 billion or more in the financial year 2027. Exporters say that due to free trade deals with West Asian countries and the strength of service and tech-based sectors like electronics, India’s goods and services exports can reach $ 840-850 billion in financial year 2026 and increase to about $ 950 billion in 2026-27. However, rising tariffs and trade restrictions related to climate change are expected to pose significant challenges to sustaining export growth.
Friendship with Middle East will bear fruits
Ajay Sahay, Director General of Federation of Indian Export Organizations (FIEO) said that the worst phase for Indian exports has passed and we are hopeful that the tech-based sector will perform well. Exports in 2025-26 could be between $840-850 billion, while total exports could reach $950 billion in fiscal year 2027. Exporters said the Red Sea crisis has almost been resolved and the industry has taken into account the huge 50 per cent tariff imposed by the US. With the support of the Centre’s Export Incentive Mission, the industry is successfully diversifying its products and markets.
Benefit to cloth and apparel industry
TT Limited MD Sanjay K Jain said in a media report that due to the implementation of FTA between India and Britain and fundamental improvements in the industry due to domestic measures like GST reform, removal of quality control orders and duty free cotton, the overall export of cloth and apparel may grow by 10-20 percent next year. Similarly, electronics manufacturing, now India’s third largest export category, is likely to register strong export growth next year; India’s total exports (goods and services) in April-November of financial year 2026 are estimated to be $ 562.13 billion, which is 5.43 percent more than $ 533.16 billion a year ago.
Eye on bilateral trade with America
New Delhi finalized three important trade agreements in 2025, including signing agreements with Britain and Oman and completing negotiations with New Zealand. The India-UK Comprehensive Economic and Trade Agreement (CETA) is expected to come into force in 2026. Exporters’ hopes are pinned on an early bilateral trade deal with the US and progress in a trade agreement with the European Union. Because of which he is adopting a very cautious approach.
An industry expert said in a media report that foreign trade agreements have a fixed time limit and the results will be visible next year. However, labor-intensive sectors may be impacted by US tariffs. The European Union market is not growing very fast. There is an expectation of increase in exports from the Middle East.
What is the harm caused by American tariffs?
Manu Gupta, president of the Toy Association of India, said that the next year looks quite uncertain unless some concrete steps are taken on the issue of US tariffs. Toys are manufactured primarily by OEMs, so tariffs have led some companies to transfer toy-making equipment, such as molds, from India to Vietnam and Indonesia.
Exporters say that the 50 per cent tariff imposed by the US on India will hinder new business in the textile industry, but 50-60 per cent of regular trade with the US will continue and the currency is expected to strengthen. Apart from this, after implementation of FTA (Free Trade Agreement), cheap wool import from New Zealand will help the domestic textile industry. According to experts, India will buy raw materials from many of its new Free Trade Agreement (FTA) partners, which will remove the concerns of inverted duty structure.