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1Trade Watch April-June (Q1) FY26
April - June (Q1 FY26)
QUARTERLY
TRADE WATCH
THEMATIC ANALYSIS:
AUTOMOTIVE EXPORTS TRADE WATCH QUARTERLY, Quarterly Report for the FY26
Copyright@ NITI Aayog, 2026
Published: January, 2026
NITI Aayog
Government of India
Sansad Marg, New Delhi-110001, India April-June (Q1) FY26
TRADE WATCH
QUARTERLY
New Delhi
January’2026 iTrade Watch April-June (Q1) FY26
ADVISORY BOARD
S. No.Board MemberAffiliation
1 Harsha Vardhana Singh Former Deputy Director, WTO
2 Santosh Kumar Sarangi
Former Additional Secretary & Director
General, DGFT
3 Pravin KrishnaProfessor, Johns Hopkins University
4 Rupa ChandaDirector, UNESCAP
5 Deepak MishraDirector and Chief Executive, ICRIER
6 Rakesh Mohan Joshi Professor and Vice Chancellor, IIFT, Delhi
7 Arpita Mukherjee Professor, ICRIER
8 James J. Nedumpara
Professor and Head, Centre for Trade and
Investment Law (CTIL)
9 Pritam Banerjee
Professor and Head, Centre for WTO
Studies
10 C VeeramaniDirector, Centre for Development Studies
11 Sanjay KathuriaVisiting Senior Fellow, CSEP
12 Biswajit NagProfessor, IIFT
13 Debashis Chakraborty Professor, IIFT, Kolkata
14 Pranjul Bhandari Chief India Economist, HSBC iiTrade Watch April-June (Q1) FY26
EXECUTIVE SUMMARY
Global trade in goods and services maintained its momentum in April–June 2025,
expanding by about 2.5% quarter-on-quarter. The upturn was driven mainly by
developing economies and rising South–South trade, even as the United States
trade performance weighed on the global average. Goods trade strengthened, with
growth improving from around 2% to 2.5%, while services trade rebounded, turning
positive after a contraction in the previous quarter.
1

India’s overall trade position in Q1 FY26 remained stable, with total merchandise and
services trade reaching $439 bn, growing 3.5% y-o-y. Services continued to drive the
expansion, with exports rising 10% and contributing to a large surplus of $48 bn.
Goods exports declined 2.1% to $112 bn, reflecting low global demand and sector-
specific disruptions, whereas imports grew marginally by ~5%, driven by higher
demand for industrial inputs and technology-intensive goods.
India’s trade performance in Apr–Jun 2025 reflects a structural shift, with high-tech and
capital-goods segments driving resilience amid weakness in petroleum and labour-
intensive exports. On the import side, a parallel reorientation toward electronics,
machinery, and chemicals signals deeper integration into global value chains and
ongoing manufacturing upgrading. Complementing these trends in goods trade,
the analysis also highlights the rising importance of the creative economy in global
trade, led by digitally delivered, skill-intensive services such as software, R&D, and
digital content, whose export value now far exceeds that of creative goods. India
stands out as a major global player in creative services, reflecting its strength in
technology-enabled and innovation-driven activities.
The thematic focus of this quarter’s edition is India’s automotive exports, a sector with
growing global relevance and integration into international value chains. Globally, the
automotive import volume is valued at $2.2 trillion in 2024, with India contributing
~$30 bn in exports which accounts for 1.4% of the world demand. India’s automotive
exports reach a broad international footprint, with key destinations including Japan,
Mexico, and various markets across Africa and Latin America. In global automotive
demand, passenger vehicles accounts for about 71%, and India has captured around
1% of this market. In contrast, motorcycles represent roughly 3% of global demand,
and India’s export share in this segment is about 9%. This asymmetry highlights the
need to reorient India’s automotive export basket towards high-demand segments.
India’s automotive industry has grown, with a primary focus on catering to the
domestic market and a tariff regime that promotes domestic manufacturing and
sales. While applied tariffs remain high and intra-industry trade is currently limited,
export patterns reflect clear areas of specialisation, offering a strong base for future
diversification and deeper integration into global automotive value chains. India’s
backward integration into global value chains has also improved, rising from 32%
in 2015 to 46% in 2024. However, forward and two-sided linkages remain limited.
The sector is gradually shifting from final-goods trade toward multi-stage, modular
production, driven by imported intermediates and EV inputs, but deeper GVC
integration will require a policy shift from protection toward lower input tariffs,
improved logistics, and stronger alignment with standards.
1 https://unctad.org/system/files/official-document/ditcinf2025d8_en.pdf iiiTrade Watch April-June (Q1) FY26
To enhance competitiveness and global positioning, India needs strategic measures
that include reducing tariffs, boosting two-way trade and cross-border platform
participation, and reorienting production toward high-demand segments such
as passenger vehicles. Strengthening quality standards, certification systems, and
technology adoption, alongside fostering forward linkages in global supply chains,
will be critical. Coupled with domestic market strength, these actions can help India
scale high-quality production, broaden market diversification, and capture a larger
share of global automotive trade. ivTrade Watch April-June (Q1) FY26
HIGHLIGHTS
1. In Q1 FY26, India’s goods and services exports reached $209 bn and imports $230
bn, each expanding by around 3–4% y-o-y, registering a combined deficit of $21
bn.
2. In Q1 FY26, exports increased to the USA, China, and Germany but declined to the
Netherlands and the UK due to lower petroleum and smartphone shipments;
On the import side, the share sourced from the top four partners increased from
~38% in Q4 FY25 to ~42% in Q1 FY26.
3. Technology-intensive sectors, electronics, machinery, and chemicals, now
anchor India’s trade performance. Electronics exports surged 47% y-o-y, lifting
their share to over 11% of total exports, while machinery exports also grew by 11.1%
during the quarter.
4. Creative services exports reached $1.5 trillion in 2023 (19% of global services trade),
dominated by software and R&D, with India ranking fourth globally, highlighting
its strong position and significant untapped potential in high-value digital
creative exports.
5. Since 2015, India’s share in the global automotive import market has remained
broadly at around 1%, with export growth of 3.5% CAGR, slightly below the
global average of 3.9% due to slower growth in high demand segments such as
passenger vehicles, tractors and motorcycles.
6. While the global auto-components market grew modestly to $856 bn in 2024
(3% CAGR since 2015), India’s exports nearly doubled from $8.2 bn to $16.9 bn,
recording a faster 7% CAGR over 2015–24. This outperformance was driven by
strong export growth in vehicle parts, rubber components, engine parts, and
diesel engines, where India’s export growth exceeded global import growth.
7. Germany, Mexico, the US, and China together account for $395 bn, or about
30%, of global automotive exports, with distinct specialisations by Germany in
passenger vehicles and parts, by Mexico in other motor vehicles and tractors by
China in motorcycles, commercial and special-purpose vehicles, and the US in
rubber and engine components.
8. India shows low two-way trade in final vehicles, reflecting niche export
specialisation, but records higher intra-industry trade in auto components,
indicating growing integration into global production networks.
9. While global EV imports surged nearly 30 times between 2020 and 2024,
India’s participation remains negligible at ~0.1% of global exports and imports,
underscoring a widening gap between global momentum and India’s trade
footprint.
10. India needs to enhance export competitiveness by rationalising incentives and
correcting cost distortions, expanding export-linked financing for emerging
markets, reducing inland and port logistics costs, and accelerating domestic
production of critical inputs such as EV batteries.
11. India must deepen market access through targeted trade diplomacy and scheme
recalibration by addressing non-tariff barriers via MRAs and customs cooperation,
strategically leveraging FTAs and Lines of Credit in priority markets, and mid-
course correcting PLI-AUTO to support scale, MSMEs, and non-EV segments. viTrade Watch April-June (Q1) FY26
Contents
A. India’s Trade Analysis��1
1. Merchandise and Services Analysis��2
2. Compositional Analysis��3
3. Trade Direction��5
4. Regional Analysis��6
5. Merchandise Trade with FTA Partners��8
6. Sectoral Merchandise Trade Dynamics��9
7. Creative Economy��11
B. Thematic Analysis: Automotive Exports��15
1. Mapping the Trade Profile of the Automobile Exports��17
2. Mapping the Trade Profile of the Auto Components Exports��19
3. Change in share in the Automotive Industry over the years (2015-24)��21
4. Mapping Global Demand and India’s Export

Footprint in Key Automotive Segments��22
5. Assessing Automotive Performance through Units Sold��27
6. Intra-Industry Trade Analysis��28
7. India’s Presence in the Global Value Chain for Automobile��29
8. Foreign Investment Trends in the Automobile Industry��31
9. Technology Transition: EVs & Future Mobility��32
10. Recent Developments in India’s Trade Policies: Key Updates for the
Automobile Sector��34
11. Industry Insights on Strengthening India’s Automotive Trade Performance��36
12. Way Forward��38
C. Policy and Geopolitical Highlights��41
1. Global Trade–Related Policy Updates��42
2. India’s Trade Policy Developments��42
3. Commodity Price Trends��43 1Trade Watch April-June (Q1) FY26
A.
INDIA’S TRADE
ANALYSIS 2Trade Watch April-June (Q1) FY26
A. India’s Trade Analysis
Global goods trade continued to expand despite elevated trade policy uncertainty.
The volume of global merchandise trade, measured by the average of exports and
imports, expanded by 4.3% y-o-y in Apr-Jun 2025. Nearly half of this growth was driven
by AI-related goods, such as semiconductors, servers, and telecommunications
equipment, which recorded a 20% y-o-y increase in value. Asia emerged as a key
contributor, with robust export growth in AI-linked products aligning with the global
surge in investment across the artificial intelligence sector.
1
India’s merchandise and services trade performance remained steady between Apr-
Jun 2025, supported by resilient export demand in key sectors such as engineering
goods, pharmaceuticals, and IT services, alongside stable import flows of energy
and intermediate goods that sustained production and supply chains. During this
period, total trade reached $439 bn, marking a y-o-y growth of approximately 3.5%.
Both exports and imports also grew by around 3-4% each, with exports reaching
$209 bn and imports at $230 bn during April–June 2025. (Fig 1)
Fig 1: Trade performance in Q1 FY 26
3.67% 3.23%
4.07%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
0
50
100
150
200
250
300
350
400
450
500
Total TradeExportImport
USD Billion
Apr -Jun 2024 Apr-Jun 2025 Change % (RHS)
Source: Department of Commerce, MoC&I, GOI
1. Merchandise and Services Analysis
During the quarter, monthly merchandise exports averaged $37.2 billion and imports
averaged $60.1 billion. In June, exports stood at $35 billion, reflecting a marginal 1.3%
moderation, while imports declined by 3.4% to $54 billion. (Fig 2) However, India’s
total trade (merchandise + services) in Q1 FY26 was up 3.7% y-o-y, with services trade
up 7% and merchandise trade up 2%. In Q1 FY26, merchandise exports declined by
2.1% y-o-y to $112 bn, and imports rose marginally by ~5% reaching $180 bn. (Fig 3)
1 https://www.wto.org/english/news_e/news25_e/stat_07oct25_e.htm 3Trade Watch April-June (Q1) FY26
Figure 2: Merchandise Trade (Monthly) Figure 3: Merchandise Trade (Quarterly) -1.27%
-3.40%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0
10
20
30
40
50
60
June (EX) June (IM)
US $ Billion
2024 2025 y-o-y % (RHS)
-2.11%
4.78%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
0
40
80
120
160
200
Q1 (EX) Q1 (IM)
US $ Billion
Apr -Mar 2024 Apr-Mar 2025 y-o-y % (RHS)
Source: Department of Commerce, MoC&I, GOI
India’s services exports for June’25 stood at $32 bn, registering a strong y-o-y growth
of 12%, while services imports increased by 5% reaching ~$16 bn. (Fig 4). During Q1
FY26, services exports witnessed a robust annual expansion of 10%, reaching $97 bn
and services imports rose marginally by 1.56% to $49.5 bn during the same period,
resulting in a net services trade surplus of $48 bn. (Fig 5) The combined balance of
trade in goods and services registered a net deficit of $21 bn for this quarter.
Figure 4: Services Trade (Monthly) Figure 5: Services Trade (Quarterly) 11.97%
5.08%
0%
2%
4%
6%
8%
10%
12%
14%
0
5
10
15
20
25
30
35
June (EX) June (IM)
US $ Billion
2024 2025 y-o-y % (RHS)
10.10%
1.56%
0%
2%
4%
6%
8%
10%
12%
0
20
40
60
80
100
120
Q1 (EX) Q1 (IM)
US $ Billion
Apr -Mar 2024 Apr-Mar 2025 y-o-y % (RHS)
Source: Department of Commerce, MoC&I, GOI
2. Compositional Analysis
2.1 Merchandise Exports
In Q1 FY26, the leading
2
exports amounted to $71 bn marking a y-o-y decline of 3.6%.
The leading commodities continued to be mineral fuels (15.7% share), electrical
machinery and equipment (12.4%), and nuclear reactors (7.9%). The top ten categories
are the same as in Q1 FY25. However, significant y-o-y declines were observed in
specific sectors; most notably, mineral fuels and related products, which fell by ~32%,
and natural and cultured pearls, which dropped by 8.3% but with the exception of
electrical machinery which experienced a strong growth of 45%. (Fig 6)
Exports of electrical machinery surged, driven by the sharp rise in smartphone
shipments.
3
In contrast, exports of mineral fuels declined, primarily due to reduced
petroleum exports to Netherlands, US and UAE. Exports of natural and cultured pearls,
particularly diamonds, were also adversely affected. This decline is linked to multiple
factors, including growing competition from lab-grown diamonds and higher tariff
pressures in the United States which is one of India’s key export destinations.
4
2 Leading commodities are the top ten commodities with the highest value share in exports.
3 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2175702
4 https://www.careratings.com/uploads/newsfiles/1758532474_Diamond%20Industry%20-%20CareEdge%20Report.pdf 4Trade Watch April-June (Q1) FY26
Fig 6: Composition and Growth of Exports
15.7%(-31.8%)
12.4%(45.0%)
7.9%(10.1%)
6.0%(-8.3%)
5.5%(5.2%)
5.4%(11.6%)
4.3%(-5.0%)
2.7%(3.5%)
2.2%(6.3%)
2.1%(2.0%)
0% 2% 4% 6% 8% 10%12%14%16%
Mineral fuels, mineral oils & products
Electrical machinery & equipment & parts
Nuclear reactors, boilers, machinery & parts
Natural, cultured pearls,precious or semiprecious
stones
Pharmaceutical products
Vehicles other than railway & parts thereof
Organic chemicals
Cereals
Articles of iron or steel
Iron and Steel
Note: y-o-y growth of the commodity in India’s export for this quarter is mentioned in parenthesis

Source: Department of Commerce, MoC&I, GOI
2.2 Merchandise Imports
In Q1 FY26, the leading
5
imports amounted to $143 bn marking a y-o-y increase of 5%.
The imports continue to be led by mineral fuels (31.8% share), electrical machinery
(13.6%), natural and cultured pearls (9.4%), and nuclear reactors (7.8%). Among the
top ten import categories, inorganic chemicals replaced aircraft, spacecrafts, and
their parts, compared to the Q1 FY26. The overall increase in imports was driven by
significant y-o-y growth of 165% in inorganic chemicals ($2.4 bn to $6.3 bn), 27.3% in
electrical machinery and 14.7% in nuclear reactors. (Fig 7)
Under inorganic chemicals, imports surged sharply in Q1 FY26, driven by a 700%
y-o-y increase in gold compounds (HS 2843). These compounds are primarily used
in electronics and circuit board manufacturing, as well as in chemical research.
Similarly, imports of electrical machinery increased, driven by higher demand for
circuits, processors, and lithium-ion components.
Fig 7: Composition and Growth of Imports
31.8%(-6.3%)
13.6%(27.3%)
9.4%(-14.7%)
7.8%(-8.5%)
3.7%(-1.7%)
3.5%(165%)
3.1%(4.6%)
2.4%(1.7%)
2.2%(-0.6%)
1.9%(7.4%)
0% 5% 10% 15% 20% 25% 30% 35% 40%
Mineral fuels, mineral oils & products
Electrical machinery & equipment & parts
Nuclear reactors, boilers, machinery & parts
Natural, cultured pearls,precious or semiprecious stones
Organic chemicals
Inogranic Chemicals and Compounds
Plastic and articles
Animal or vegetable fats and oils
Iron and steel
Optical, Photographic & Cinematographic

Note: y-o-y growth of the commodity in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
5 Leading commodities are the top ten commodities with the highest value share in imports. 5Trade Watch April-June (Q1) FY26
3. Trade Direction
3.1 Merchandise Exports
India’s exports to its top markets
6
including the USA, UAE, Netherlands, China and
UK, remained steady, collectively contributing around 42% of total exports in Q1 FY26,
amounting to ~$48 bn, witnessed a marginal y-o-y increase of 3%. The sustained
concentration in a few markets highlights the importance of maintaining scope for
diversification across a wider range of destinations.
Among the top ten export destinations, India registered positive growth with three
countries (Fig 8). The exports to USA saw a y-o-y increase of 18.3%, while exports to
China and Germany increased by 16.5% and 10.7% respectively, in the same period.
Exports to the Netherlands recorded a y-o-y decline of 30%, falling to $5.5 bn from
$7.92 bn last year, primarily due to lower shipments of petroleum products and
smartphones. Exports to the UK also fell from $4 bn to $3.3 bn, largely driven by
reduced petroleum and smartphone exports.
Fig 8: India’s exports to major destinations
-40%
-30%
-20%
-10%
0%
10%
20%
30%
0
5
10
15
20
25
30
USD Billion
Q1 FY25 Q1 FY26 % Y-o-Y Growth Q1 (RHS) % share in India's exports Q1'FY26 (RHS)
Source: Department of Commerce, MoC&I, GOI
3.2 Merchandise Imports
India’s share of imports from its top
7
markets - China, UAE, Russia, USA increased,
contributing around 43% of total imports in Q1 FY26 from 39% in Q1 FY25, amounting
to ~$76.7 bn. In Q1 FY26, India recorded significant y-o-y import growth, with notable
increases from UAE (28.7%), China (16.3%), USA (16.9%) and Singapore (14%). However,
import growth declined with Iraq (-13.3%), Russia (-8.7%) and Saudi Arabia (-8.50%).
(Fig 9)
6 Top markets are those that account for the top 10 shares of total exports in Q1 FY26.
7 Top markets are those that account for the top 10 shares of total imports in Q1 FY26. 6Trade Watch April-June (Q1) FY26
Fig 9: India’s imports from major destinations
-30%
-20%
-10%
0%
10%
20%
30%
40%
0
5
10
15
20
25
30
35
USD Billion
Q1'FY25 Q1'FY26 % Y-o-Y Growth Q1 (RHS) % share in India's imports Q1'FY26 (RHS)
Source: Department of Commerce, MoC&I, GOI
Gold compounds and petroleum primarily drove rising imports from the UAE. Gold
compounds, which were previously not imported from the UAE, have now made
the UAE one of the top import sources, surpassing Japan, which was previously
the leading supplier. Imports of petroleum oils and oils obtained from bituminous
minerals have also increased sharply. From China, the surge was concentrated in the
‘other’ subcategories under HS 85, particularly codes 851779 (circuit boards-parts)
and 854239 (electronic integrated circuits-other). In the case of Iraq, while imports
of petroleum oils declined, imports of mineral fuels in gaseous form and petroleum
bitumen rose. Notably, crude soybean oil sourcing from Iraq has also begun. Imports
from Russia, however, declined due to lower petroleum oil inflows.
4. Regional Analysis
4.1 Merchandise Exports
India’s exports to its top 10 export regions, which accounted for 89% of its total exports
in Q1 FY26, declined 2% y-o-y. North America remains India’s largest export market,
accounting for approximately a quarter of total exports during this quarter, with
y-o-y growth of around 16%. The USA accounts for 90% of this growth. EU countries,
another major export destination, experienced a y-o-y decline of ~12%, primarily from
the Netherlands, France, and Italy. A similar decline was recorded in the GCC region,
due to reduced exports to the big markets like UAE, Saudi Arabia, Qatar and Kuwait.
The steepest drop came from ASEAN countries, driven by Singapore, Malaysia, and
Indonesia. Exports to Northeast Asia increased by 11%, led by higher exports to China,
South Korea, Hong Kong and Japan. (Fig 10) 7Trade Watch April-June (Q1) FY26
Fig 10: Region-Wise Export Composition and Growth
25.0%(16.2%)
16.7%(12.4%)
12.2%(-4.7%)
8.4%(11.1%)
8.1%(-16.9%)
5.5%(-3.6%)
4.0%(-21.9%)
3.6%(8.2%)
2.8%(-5.6%)
2.6%(-7.6%)
0% 5% 10% 15% 20% 25% 30%
North America
EU Countries
West Asia- GCC
NE Asia
ASEAN
South Asia
Other European Countries
Latin America
West Africa
East Africa
Note: y-o-y growth of the commodity in India’s exports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
4.2 Merchandise Imports
India’s Q1 FY26 imports registered an overall growth of 6% to the top ten regions,
reaching $167 bn this quarter. Seven out of ten regions continue to experience
positive y-o-y growth. India’s imports mainly came from North East (NE) Asia, West
Asia (GCC), ASEAN, accounting for ~55% of total imports during the quarter. (Fig 11)
The West Asia–GCC region, holding a 16.97% share, also recorded robust y-o-y
growth of 11.0%, supported by higher imports from the UAE and Saudi Arabia, which
together account for nearly four-fifths of regional imports. Moderate expansion was
also observed in North America (10.3%), Latin America (11.9%), and the EU (5.6%).
Conversely, imports from certain regions witnessed a contraction. Other CIS
(Commonwealth of Independent States) countries declined by 9%, while Other West
Asia and EFTA (European Free Trade Association) saw sharper drops of 11.2% and 26%,
respectively. Imports from ASEAN, which constitute 11.47% of India’s total, showed
only a 1.4% increase. Despite these mixed trends, India’s overall import basket in Q1
FY26 reflected strong momentum in industrial inputs, energy needs, and technology
goods, signalling sustained domestic investment activity and production demand. 8Trade Watch April-June (Q1) FY26
Fig 11: Region-Wise Import Composition and Growth
26.3%(15.07%)
17.0%(11.0%)
11.5%(1.4%)
9.4%(-9.0%)
8.6%(5.5%)
8.1%(10.3%)
4.6%(-11.2%)
3.2%(11.9%)
2.1%(33.9%)
1.9%(-25.9%)
0% 5% 10% 15% 20% 25% 30%
NE Asia
West Asia- GCC
ASEAN
Other CIS Countries
EU Countries
North America
Other West Asia
Latin America
West Africa
European Free Trade Associatipn
(EFTA)
Note: y-o-y growth of the commodity in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
5. Merchandise Trade with FTA Partners
India’s trade performance with its Free Trade Agreement (FTA) partner countries in Q1
FY26 reflected a widening trade deficit, as imports grew faster than exports. Total imports
from FTA partners increased by 10% y-o-y, reaching $65.3 bn, while exports declined by
9% to $38.7 bn, resulting in a trade deficit of $26.7 bn, up 59.2% from a year ago.
India’s shipments to FTA countries contracted, exports to ASEAN, the largest FTA
export partner, fell by 16.9%, while Malaysia (-39.7%), Singapore (-13.2%), and Australia
(-10.9%) also witnessed sharp declines. UAE, India’s second-largest FTA export
destination, saw a modest 2.1% dip, whereas exports to South Korea (15.6%), Japan
(2.8%), Thailand (2.9%), and Bhutan (10.2%) recorded marginal gains. (Fig 12)
Fig 12: Exports- FTA Partners
-60%
-40%
-20%
0%
20%
0
2
4
6
8
10
12
USD Billion
Q1 FY25 Q1 FY26 y-o-y change in Q1'FY26 (RHS)
Source: Department of Commerce, MoC&I, GOI 9Trade Watch April-June (Q1) FY26
The rise in imports was led by strong growth from the UAE (28.7%), SAFTA countries
(33.6%), Japan (20.8%), and Thailand (18.1%) and Singapore (14.1%), reflecting higher
inflows of energy products, machinery, and intermediate goods. Imports from
Nepal also surged by 180.5%, albeit on a low base, while ASEAN registered moderate
increases of 1.4%. In contrast, imports from Australia (-10.9%) and Bhutan (-86.6%) fell.
(Fig 13)
The overall contraction in FTA exports, coupled with stronger import growth,
suggests a demand recovery skewed toward imported inputs and energy products
rather than export-oriented manufacturing, highlighting the need for deeper value-
chain integration and competitiveness within India’s existing FTAs.
Fig 13: Imports- FTA Partners
-100%
-60%
-20%
20%
60%
100%
0
4
8
12
16
20
24
USD Billion
Q1 FY25 Q1 FY26 y-o-y change in Q1'FY26 (RHS)
(800%)
Source: Department of Commerce, MoC&I, GOI
6. Sectoral Merchandise Trade Dynamics
India’s export performance in Apr–Jun 2025 shows a clear structural divergence,
while headline growth was weighed down by a steep 29.9% decline in petroleum
exports, the rest of the export basket exhibited resilience and even strong expansion
in key sectors. Electronics emerged as the standout performer, rising 47% y-o-y and
increasing its share to over 11% of total exports, reflecting deeper integration into
global electronics supply chains. Machinery also recorded healthy growth of 11.1%,
further strengthening the technological and capital-goods component of India’s
export profile. Traditional sectors such as chemicals, agriculture, textiles, plastics,
and base metals registered modest but stable growth, indicating a broad, though
moderate, recovery in global demand. (Fig 14) 10Trade Watch April-June (Q1) FY26
Fig 14: Sector wise contribution in India’s exports in Q1 FY 26 and YoY Growth
-40
-20
0
20
40
60
0
2
4
6
8
10
12
14
16
18
%Share in Q1 FY26 %Growth in Q1 FY26 over Q1 FY25 (RHS)
Source: Department of Commerce, MoC&I, GOI
At the same time, stress persists in specific employment-intensive segments. Gems
& jewellery contracted by 8.3%, and transport equipment fell by 5.3%, reflecting
weak external demand, price corrections, and stronger competition in key markets.
Taken together, the quarterly trend highlights a dual-speed export landscape,
with high-tech manufacturing driving momentum, while commodity-linked and
labour-intensive sectors face headwinds. Importantly, the fall in petroleum’s share
has improved the overall diversification of the export basket, suggesting a gradual
shift toward higher-value products and reduced dependence on volatile commodity
cycles. This pattern is mirrored on the import side as well. India’s import basket in Q1
FY26 reflects a parallel rebalancing toward technology- and industry-linked inputs,
even as traditional commodity imports showed a mild correction.
Fig 15: Sector-wise contribution in India’s imports in Q1 FY 26 and YoY Growth -20
0
20
40
0
5
10
15
20
25
30
%Share in Q1 FY26 %Growth in Q1 FY26 over Q1 FY25 (RHS)
Source: Department of Commerce, MoC&I, GOI 11Trade Watch April-June (Q1) FY26
Petroleum imports, which account for the largest share at 27.3%, contracted by 4.4%,
driven by softer global crude prices, improved refining efficiencies, and moderation
in domestic demand. In contrast, three major categories, electronics (22.3%),
chemicals (25.5%), and machinery (18.9%), registered strong double-digit growth,
signalling continued expansion in domestic manufacturing capacity. Together,
these categories now account for more than 34% of total imports, underscoring
India’s deeper integration into global value chains for high-tech and intermediate
goods. Meanwhile, several resource- and labour-intensive segments such as gems
& jewellery (–8.5%), ores & minerals (–7.5%), transport equipment (–13.6%), and agri
products (–2.7%) witnessed contraction, indicating softer domestic demand. Overall,
the Q1 FY26 import profile points to a structural shift toward intermediate and capital
goods that enable domestic production and technological upgrading, reinforcing
the broader transformation visible on the export side. Alongside traditional trade,
the growth of the creative economy underscores the increasing role of intangible,
innovation-driven exports in India’s trade landscape, as discussed in the following
section. (Fig 15)
7. Creative Economy
8
Alongside the expansion of digitally delivered services, the creative economy has
emerged as an increasingly important component of global trade, spanning
software, gaming, audiovisual media, publishing, advertising, and other design- and
culture-based industries. Built on human creativity and digital innovation, these
sectors generate high-value exports, support nearly 50 million jobs worldwide, and
strengthen countries’ technological and innovation capabilities. As global demand
shifts toward intangible assets and technology-enabled content, their trade
relevance has grown rapidly.
UNCTAD’s Creative Economy Outlook 2024 highlights this shift, showing that
creative-services exports rose to $ 1.5 trillion in 2023, more than double the value of
creative goods exports, and now account for 19% of global services trade, up from
about 12% a decade ago. At the same time, the market remains concentrated, with
the top 10 economies accounting for 73% of global creative services exports. Ireland
and the United States lead globally, followed by the United Kingdom, India, and
Germany, even as developing economies, particularly India, China, and Singapore,
have continued to strengthen their presence, reflecting shifting comparative
advantages in digital content and ICT-enabled creative industries.
8 https://unctad.org/publication/creative-economy-outlook-2024 12Trade Watch April-June (Q1) FY26
Fig 16 & 17: Top 10 economies Creative Services and Goods exports 2023 ($bn)
229.6
40.5
32.2
31.5
28.3
20.6
17.8
16.4
15.8
13.6
0 50 100 150 200 250
China
Italy
France
Hong Kong
Germany
India
Switzerland
United Kingdom
Turkiye
Netherlands
Creative Goods Exports 2023
256.8
256.6
101.7
94.2
91.8
80.4
72.3
62.6
52.8
43.1
0 100 200 300
Ireland
United States
United Kingdom
India
Germany
China
Singapore
Netherlands (Kingdom of the)
Japan
France
Creative Services exports 2023
Source: UNCTAD
India ranks modestly in creative goods exports ($20.6bn) but performs far more
strongly in creative services ($94.2bn), ranking fourth globally. This contrast highlights
India’s core strength in skill-intensive, digital, and innovation-driven creative activities
rather than in the manufacturing of physical creative goods. With its creative sector
valued at $35 bn and exports growing 20% in 2023, India remains well-positioned to
expand its role in the rapidly evolving global creative economy.
World Creative Economy exports by category
Creative Services: The most exported creative services in 2023 were software services
(40.8%) and research and development (30.5%), followed by advertising, market
research, and architecture (15.9%), audiovisual services (8.0%), information services
(4.1%), and cultural, recreational, and heritage services (0.6%). Developed economies
continue to lead global creative-services trade, accounting for the overwhelming
majority of exports. However, this dominance has been slowly diminishing as
developing economies expand their capabilities. Over the past decade, their share
in global creative-services exports has steadily increased, signalling a gradual but
meaningful rise in participation and competitiveness.
Fig 18 & 19: World creative services and goods exports by category, ($bn)
0
200
400
600
800
World creative goods exports by product
groups (USD bn)
Others
Books and publishing
Music, performing and visual arts
Software, video games and recorded media
Manufacturing of crafts and design goods
0
200
400
600
800
1000
1200
1400
1600
World creative services exports by category
(USD bn)
Cultural, recreational, and heritage
Information
Audio-visual
Advertising, market research, and architecture
Research and development
Software
Source:UNCTAD
Creative Goods: In 2023, global creative goods exports continued to be dominated by
crafts and design goods, which historically account for about 76–77% of total creative
goods exports and remained the largest category at over $ 519 n. Software, video 13Trade Watch April-June (Q1) FY26
games and recorded media followed at nearly $85 bn, while music, performing and
visual arts-related goods and books and publishing stayed relatively small at roughly
$35 bn and $25 bn, respectively. Within crafts and design goods, interior design
products hold the largest share, followed by jewellery, fashion accessories and toys.
Developed economies continue to lead in books, publishing and arts-related goods.
In contrast, developing economies dominate exports of craft and design goods, as
well as software, video games, and recorded media products.
India’s performance within the global creative economy highlights considerable
untapped potential. While its creative goods exports remain modest, India is already
a major player in creative services, particularly software, R&D, design, and digital
content, which are also the fastest-growing segments globally. With a large pool of
creative and tech talent, strong digital infrastructure, and rapidly expanding media
and design industries, India is well-positioned to capture a significantly larger share
of global creative-services exports. 14Trade Watch April-June (Q1) FY26 15Trade Watch April-June (Q1) FY26
B.
THEMATIC ANALYSIS:
AUTOMOTIVE EXPORTS 16Trade Watch April-June (Q1) FY26
B. Overview
The automotive industry, encompassing both vehicles and components, remains
one of the most critical pillars of the economy due to its substantial contribution to
growth, employment generation, and extensive cross-sectoral linkages. Automobiles
account for the fourth-largest share of global merchandise exports. Together, the
automotive and components sectors account for ~$2.2 trillion of global demand in
2024.
At the global level, the automotive industry remains a major contributor to the world
economy and employment. The car industry accounts for around 6% of gross value
added by manufacturing or around 1% of global GDP directly in 2024, with its broader
economic footprint including indirect effects raising total contribution to about 3%
of global GDP.
9
Automotive production also drives substantial demand for key industrial materials,
representing roughly 6% of global steel demand and 17% of global aluminum
demand, underscoring the sector’s deep linkages across the global manufacturing
base. Major producers including China, the European Union, Japan, South Korea
and the United States together account for around 80% of the direct value added in
global car manufacturing, and in many major economies, every dollar of automotive
output generates roughly $0.7 of additional value added in the wider economy.
10

For Germany, a long-established leader in the automotive industry, the sector
remains one of the country’s largest and most important industries, contributing
substantially to economic output and employment. In 2024, Germany’s automotive
sector directly employed about 773,000 workers and contributed roughly 5% of
value-added GDP. The country produced around 4 million passenger cars, most of
which were exported, while a dense supplier base with 85% medium-sized firms
generating nearly 70% of value added anchoring the production ecosystem.
11,12
Across major automotive economies, the sector is a core driver of output, employment
and industrial linkages. Japan’s automotive industry contributes around 3% of GDP,
directly supports about 900,000 jobs (over 5 million livelihoods including indirect
employment), and accounts for roughly 14% of domestic steel demand, underscoring
strong multiplier effects.
13
In South Korea, automobiles and auto parts make up about
14% of total exports, making the sector the country’s largest manufacturing employer
and a key node in global value chains.
14
In the United States, the automotive sector
contributes close to 5% of GDP (around $1.2 trillion), supports over 10 million jobs, and
generates significant spillovers, each dollar of vehicle manufacturing creates over
$4 in wider economic activity while remaining a major source of industrial R&D and
manufacturing competitiveness.
15,16
9 https://www.iea.org/reports/what-next-for-the-global-car-industry?
10 https://www.iea.org/reports/what-next-for-the-global-car-industry?
11 https://www.gtai.de/en/invest/industries/mobility/automotive-industry
12 https://gitnux.org/german-car-industry-statistics/
13 https://www.reuters.com/business/autos-transportation/trump-auto-tariffs-take-aim-pillar-asian-economies-national-
pride-2025-03-27/
14 htps://www.reuters.com/business/autos-transportation/trump-auto-tariffs-take-aim-pillar-asian-economies-national-
pride-2025-03-27/
15 https://www.autosinnovate.org/posts/press-release/auto-innovators-data-driven-report-release
16 https://www.cargroup.org/publication/contribution-of-the-automotive-industry-to-the-economies-of-all-fifty-state-and-
the-united-states/ 17Trade Watch April-June (Q1) FY26
In India, the automobile sector supports around 30 million jobs (direct and
indirect)
17
, reflecting its multiplier effect across industries accounting for roughly
15% of domestic steel demand and nearly 50% of natural rubber consumption, while
also driving growth in electronics, IT services, glass, textiles, and leather industries.
India has also emerged as the world’s largest market for gas-based buses and three-
wheelers, with CNG adoption expanding across public and private fleets.
18
Over the past decade, policy reforms, targeted fiscal incentives, and infrastructure
developments have strengthened India’s position as a global automotive hub.
The industry has fostered innovation and technology adoption, and driven greater
localisation and value addition, thereby contributing to both economic growth and
industrial sustainability. Despite its multiplier effects, India’s share in global demand
for the automobile sector has remained stagnant at 1% over the past decade,
whereas in components, there has been a marginal increase from ~1.2% to 2%. The
industry’s cluster-based structure reinforces the importance of integration within
value chains to enhance competitiveness and efficiency. In India, the production
units are agglomerated in four major states namely Tamil Nadu, Maharashtra,
Gujarat and Haryana. Despite notable progress, India’s participation in global value
chains remains at around 3%
19
.
The analysis offers a comprehensive view of the automotive sector by mapping
global demand, identifying India’s supply position, and outlining its role in the value
chain. It also provides comparative insights across these dimensions, along with
additional perspectives on related trends. India’s automotive sector continues to
expand its production base, supported mainly by domestic demand, while export
performance remains mixed across segments. Passenger and commercial vehicles
remain primarily domestically driven, with limited exports. Two-wheelers have a
higher export base but still rely heavily on local demand. Three-wheeler exports have
also declined due to weaker global demand and a shift toward electric mobility at
home.
On the import side, the sector remains relatively insulated, with limited dependence
on fully built vehicles from abroad. The broader trend shows a gradual rise in domestic
localisation, supported by policy incentives and supply chain strengthening, which
has reduced reliance on imported inputs in several segments. Overall, India’s
automotive industry remains strongly domestic-oriented. Export growth is selective
and uneven, indicating that the sector’s integration into global markets is progressing
but not accelerating uniformly across vehicle categories.
1. Mapping the Trade Profile of the Automobile Exports
Automotive exports consist of two broad segments: finished vehicles
20
and auto
components
21
and their relative contribution to trade has evolved over time. Global
demand for automobiles, measured by imports, increased from $937 bn in 2015 to
$1.3 trillion in 2024, reflecting an average annual growth of about 4% over the period.
17 https://heavyindustries.gov.in/sites/default/files/2024-01/_loksabhaquestions_annex_1711_as396.pdf
18 https://www.siam.in/uploads/filemanager/SIAM-Annual-Report-24-25.pdf
19 https://www.niti.gov.in/sites/default/files/2025-06/Automotive%20Industry%20Powering%20India’s%20participation%20
in%20GVC_Non%20Confidential.pdf
20 This category includes HS codes 8701–8705, 8709–8713, 8715–8716, covering tractors, passenger vehicles, goods transport
vehicles, special purpose vehicles, motorcycles, bicycles, and related carriages.
21 This category includes HS codes comprising products in 40, 84, 87 covering rubber, engines and other parts and acces-
sories of different vehicles. 18Trade Watch April-June (Q1) FY26
Against this backdrop, India’s automobile exports expanded from $9.4 bn to $13.2
bn, registering a compound annual growth rate of 3.5%. In contrast, exports of auto
components grew much faster, nearly doubling from $8.2 bn to $16.9 bn, indicating
a shift in India’s export profile towards automotive components. Across both sectors,
India’s share remains modest indicating untapped potential.
Table 1 provides an overview of global demand and India’s trade position across
various automobile categories. The top three products namely; passenger vehicles,
motor vehicles and tractors account for over 91% of the world demand. Passenger
vehicles dominate, accounting for over 71% of this demand. India’s export share
remains between 0.7–1% across the top products. India exhibits higher export shares
in select niche segments. In motorcycles, India commands a higher share of global
demand close to 9% supported by robust growth in both world demand and India’s
exports. In tractors, India accounts for over 1.5% of global demand, reflecting its
established competitiveness in this category, although export growth has moderated
in recent years. These segments highlight areas where India has achieved greater
scale and market presence relative to larger vehicle categories.
On the import side, India’s finished vehicle imports have grown faster than exports,
with a CAGR of about 7% from 2015 to 2024, indicating rising domestic demand for
select vehicle categories. Imports are concentrated in passenger vehicles and niche
segments, reflecting consumer preferences and technology-intensive models rather
than broad-based dependence on foreign supply.
Overall, India’s export performance varies considerably across product categories.
India’s strengths are more pronounced in tractors and motorcycles. In contrast,
passenger and goods vehicles continue to be dominated by established exporters
such as Germany, Mexico and China, underscoring the scope for further expansion
and diversification of India’s finished vehicle export basket. 19Trade Watch April-June (Q1) FY26
Table 1: Comparison of India’s Trade Profile for the Automobile Exports, 2024
Code
Product
label
World
Imports
Product
Share in
World
De
-
mand
India’s
Exports
India’s
Imports
India’s
export
share in
World
demand
CAGR
World
Imports
(2015-
24)
CAGR
India
Exports
(2015-
24)
CAGR
India
Imports
(2015-
24)
Major
Exporter
and Vol
-
ume
‘8703
Passenger
Vehicles
(<=10
persons)
977.0 71.3% 7.0 0.66 0.7% 3.6% 2.6% 11.2%
Germany

(174.5)
‘8704
Motor
vehicles
(goods)
197.214.4% 1.4 0.07 0.7% 5.1% 6.1% 7.9%
Germany

(63.8)
‘8701
Tractors
70.8 5.2% 1.1 0.02 1.6% 3.9% 1.2% -7.7%
Mexico

(10.6)
‘8711
Motorcycles
36.4 2.7% 3.2 0.07 8.7% 7.2% 5.9% 4.3%
China

(14.5)
‘8716
Trailers and
semi-trailers
33.5 2.4% 0.2 0.06 0.6% 3.7% 14.8% 3.7%
China

(6.6)
‘8702
Commercial
Vehicles (>10
persons)
21.6 1.6% 0.2 0.01 0.8% 3.2% -4.6% -1.9%
China

(5.4)
‘8705
Public
Transport
(>10
persons)
16.0 1.2% 0.1 0.06 0.3% 4.4% 1.7% 7.4%
Germany

(4.5)
‘8707
Special
purpose
motor
vehicles
10.1 0.7% 0.0 0.18 0.4% 2.0% 8.4% 4.0%
China

(1.4)
‘8712
Other
vehicles (>=
10 persons)
8.0 0.6% 0.1 0.01 0.8% -0.6% 4.4% -16.5%
China

(2.7)
Total 1370.7 13.2 1.1 1.0% 3.9% 3.5% 7.0%
Source: ITC Trade Map
Note: Values in $bn
2. Mapping the Trade Profile of the Auto Components Exports
The auto component exports considered in this analysis are present across HS 40,
84, 85 and 87, together constituting 11 product groups, which represent a global
demand of $856 bn. These components comprise of spare parts, engines and rubber
components among others. Specifically, vehicle parts (HS 8708) dominate global
demand, accounting for over 53% of total world imports, followed by tyres, engine
parts, and engines.
The global market for auto components grew to $856 bn in 2024 at a CAGR of 3%
from $667 bn in 2015. India’s exports in this category doubled during the same
period from $8.2 bn to $16.9 bn, registering a CAGR of about 7% between 2015 and
24. While this growth reflects an improvement in competitiveness, India’s share in 20Trade Watch April-June (Q1) FY26
world demand remains at 2%, underscoring its relatively modest pace of integration
in components exports.
Table 2: Comparison of India’s Trade Profile for Auto Components Exports, 2024
Prod-
uct
code
Product label
World
Im
-
ports
Product
Share in
World
De
-
mand
India’s
Exports
India’s ex
-
port share
in World
demand
India’s
Imports
Major Ex
-
porter and
Volume
8708
Vehicle parts (cars,
buses, trucks, trac
-
tors)
451.1 52.7% 7.5 1.7% 6.2
Germany

(64.3)
4011
New pneumatic
tyres, of rubber
101.9 11.9% 3.0 2.9% 0.5
China

(22.2)
8409 Engine parts 74.5 8.7% 1.6 2.2% 1.5
Germany

(14)
8407 Petrol engines 53.5 6.2% 0.5 0.9% 0.3
USA

(7.9)
8408 Diesel engines 47.7 5.6% 1.3 2.7% 0.6
USA

(7.9)
8412
Other mechanical
engines and motors
30.4 4.1% 0.6 1.8% 0.6
USA

(4.3)
4016
Articles of vul
-
canised rubber
35.0 3.5% 0.7 1.9% 0.5
Germany

(4.6)
8714
Motorcycle and bicy
-
cle parts
23.8 2.8% 1.1 4.5% 0.5
China

(9.8)
8511
Engine electrical
parts (starter mo
-
tors, spark plugs,
alternators)
22.8 2.7% 0.4 1.8% 0.4
China

(3.5)
4009
Rubber pipes and
hoses, with or with
-
out connectors
12.7 1.5% 0.3 2.0% 0.1
China

(1.6)
4012
Used or retreaded
tyres, solid tyres, and
rubber tyre parts
2.9 0.3% 0.1 2.8% 0.0
Sri Lanka

(0.45)
Total 856.3 16.9 2.0% 11.1
Source: ITC Trade Map
Note: Values in $bn
Germany, United States, and China continue to dominate automobile components
markets. Germany leads in vehicle parts and engine components, the US in engines
and mechanical motors, and China in two-wheeler parts and engine electricals.
India’s export presence is relatively higher in select categories such as motorcycle
and bicycle parts (4.5%), new pneumatic tyres (2.9%), diesel engines (2.7%) and
engine parts (2.2%). These segments reflect areas where India is more integrated
into the components value chain, supported by scale in domestic production and
cost competitiveness.
India’s imports of components, at $11 bn is concentrated in technology-intensive
categories such as engines, electrical parts, and specialised rubber products. This 21Trade Watch April-June (Q1) FY26
pattern points to reliance on foreign suppliers for certain critical inputs, particularly
in the vehicle parts and accessories category (HS 8708).
Across this product basket, global demand expanded steadily over 2015–24, while
India’s exports grew faster than world imports with notable gains in vehicle parts,
diesel engines, engine parts, and motorcycle and bicycle components. Export
growth has been uneven, with expansion in diesel engines and other mechanical
motors, but declining performance in petrol engines.
India’s export performance in auto components is strong and improving. To raise
its market share above 2%, India must transition toward higher-value components,
EV supply chains, precision engineering, and global OEM-linked production, while
improving domestic scale and supply-chain efficiency.
22
(Table 2)
3. Change in share in the Automotive Industry over the years (2015-24)
The global automobile market expanded strongly between 2015 and 2024, with world
imports of passenger vehicles rising from $684 bn to $977 bn, and goods vehicles
from $120 bn to $197 bn. The world’s import basket for automobile has remained
broadly unchanged over the past decade with passenger vehicles and motor vehicle
goods (HS 8703, 8704) accounting for over four-fifths of world demand.
In terms of India’s position, it’s export share has broadly remained unchanged in
passenger vehicles and public transport vehicles. In the remaining categories, India
has marginal changes in segments such as tractors and motorcycles, trailers and
semi-trailers and special-purpose vehicles.
In large-volume categories, India’s global export share declined in tractors from 2.1%
to 1.6%, in motorcycles from 9.8% to 8.7%, and in commercial vehicles for passenger
transport from 1.7% to 0.8%. In contrast, India gained export share in smaller and
more specialised segments, including goods vehicles (from 0.6% to 0.7%), trailers
and semi-trailers (from 0.2% to 0.6%), special purpose motor vehicles (from 0.2% to
0.4%), and other vehicle categories (from 0.5% to 0.8%). This suggests that India has
improved competitiveness in niche automobile products. (Fig 20)
Fig 20: Change in India’s share for the Automobile in World exports (2015-2024)
-2%
-1%
0%
1%
0%
4%
8%
12%
Passenger Vehicles (<=10
persons)
Motor vehicles (goods)
Tractors
Motorcycles
Trailers and semi-trailers
Commercial Vehicles (>10
persons)
Public Transport (>10
persons)
Special purpose motor
vehicles
Other vehicles ( >= 10
persons)
India's share in world exports '15 India's share in world exports '24 Change in India's export share (2024-2015) (RHS)
Source: ITC Trade Map
22 https://www.niti.gov.in/sites/default/files/2025-06/Automotive%20Industry%20Powering%20India%E2%80%99s%20partici-
pation%20in%20GVC_Non%20Confidential.pdf 22Trade Watch April-June (Q1) FY26
Across the eleven auto-component product categories, global demand has also
remained unchanged, with vehicle parts, rubber types and engine parts continuing
to account for over three-fourths of component demand. India recorded an increase
in global export share in 10 products between 0.6 and 2.2% during 2015-24, with a
decline observed only in petrol engines (–0.5%).
Fig 21: Change in India’s share for the Auto Components in World exports (2015-2024)
-1%
0%
1%
2%
3%
0%
2%
4%
6%
Vehicle parts (cars,
buses, trucks,
tractors)
New pneumatic
tyres, of rubber
Engine parts
Petrol engines
Diesel engines
Articles of
vulcanised rubber
Other mechanical
engines and motors
Motorcycle and
bicycle parts
Engine electrical
parts (starter
motors, spark plugs,
alternators)
Rubber pipes and
hoses, with or
without connectors
Used or retreaded
tyres, solid tyres,
and rubber tyre
parts
India's share in world exports '15India's share in world exports '24Change in India's export share (2024-2015) (RHS)
Source: ITC Trade Map
World imports of vehicle parts increased from $349 bn to $451 bn, tyres from $75 bn
to $102 bn, and engine parts from $62 bn to $75 bn. India’s export share rose in large
markets such as vehicle parts (1.1% to 1.7%), new pneumatic tyres (1.7% to 2.9%), and
engine parts (1.5% to 2.2%). Gains were also recorded in diesel engines (0.8% to 2.7%)
and motorcycle and bicycle parts (2.2% to 4.5%), alongside smaller improvements
across rubber-based and electrical components. (Fig 21)
Overall, it shows India’s comparatively higher integration into global value chains for
auto components, but not in finished vehicle segments.
4. Mapping Global Demand and India’s Export Footprint in Key Automotive Seg
-
ments
This overview presents a consolidated picture of global demand patterns, India’s
export orientation, and the competitive landscape across major auto vehicles and
auto components. By mapping India’s principal export destinations alongside the
leading global exporters and the largest importing markets, the analysis offers a
comparative lens for understanding India’s positioning in global value chains relative
to the major exporters. 23Trade Watch April-June (Q1) FY26
Table 3: Mapping Auto Vehicles Demand and Supply for Top Exported Products, 2024
HS Code-Prodcut
World
Imports
(2024)
($bn)
India’s Top Export Des
-
tinations (% share)
Major Glob
-
al Exporters
(Share in
World Exports
%)
Top Importers
of Auto Vehi
-
cles (%)
8703- Motor cars and
other motor vehicles
for the transport of <10
persons
977.0
Saudi Arabia (17.3), South
Africa (16.2), Mexico (12.6)
Germany (18.4),
Japan (11.3),
China (9.5)
USA (22.5),
Germany (7.3),
UK (5.8)
8704- Motor vehicles for
the transport of goods
197.2
Saudi Arabia (18.4), South
Africa (13.1), Indonesia
(8.9)
Mexico (22.2),
Germany (14.4),
China (7.5)
USA (24.2),
Canada (10.1),
UK (5.6)
8701- Tractors (other
than tractors of heading
8709)
70.8
USA (22.8), Brazil (7.9),
Mexico (7.1)
Mexico (14.4),
USA (11.4), Chi
-
na (10)
USA (22.1), Can
-
ada (7.5), France
(5.8)
8711- Motorcycles 36.4
Mexico (12.5), Colombia
(10.7), Nigeria (5.8)
China (34.2),
Germany (8.1),
Japan (7.8)
USA (11), Ger
-
many (7.3),
France (5.8)
Source: ITC Trade Map
Motor Cars and Vehicles for Transport of <10 Persons (HS Code 8703): Global
demand is concentrated in this segment, with the USA, Germany, and the UK
emerging as the top importers. Germany, Japan, and China dominate world exports,
supplying high-quality and technologically advanced vehicles primarily to the US
and European markets. India’s exports, however, remain focused on Saudi Arabia,
South Africa, and Mexico, markets that value competitive pricing and durable mid-
range models. To build deeper presence in premium markets, India must upgrade
safety features, expand EV-ready platforms, and strengthen brand visibility.
Motor Vehicles for the Transport of Goods (HS Code 8704): Mexico, Germany,
and China lead global exports in this segment, supplying to the USA, Canada, and
the UK, markets driven by logistics, construction, and industrial demand. India’s
shipments are primarily directed toward Saudi Arabia, South Africa, and Indonesia,
where demand is expanding due to infrastructure growth. To capture a larger global
share, India must strengthen capabilities in fuel-efficient commercial vehicles,
improve CBM (condition-based maintenance) technologies, and enhance reliability
standards.
Tractors (HS Code 8701): Global exports are dominated by Mexico, the USA, and
China, which supply to high-consuming agricultural markets such as the USA,
Canada, and France. India’s exports, mainly to the USA, Brazil, and Mexico, benefit
from competitive pricing and robust performance in diverse terrains. With rising
global demand for sustainable farm equipment, India can tap into new opportunities
by expanding electric and hybrid tractor models, and offering bundled maintenance
services.
Motorcycles (HS Code 8711): China, Germany, and Japan dominate global exports,
targeting the USA, Germany, and France as key markets. India’s export base is shifting
toward Mexico, Colombia, and Nigeria, reflecting strong demand for affordable,
fuel-efficient two-wheelers. To strengthen competitiveness, India should expand
its presence in Latin America and Africa, develop mid-capacity models for Western 24Trade Watch April-June (Q1) FY26
markets, and explore EV opportunities for two-wheelers. Participation in global
automotive fairs and collaboration with regional distributors can enhance brand
reach and product acceptance.
Table 4: Mapping Auto Components Demand and Supply for Top Exported Products, 2024
HS Code-Product
World Imports
(2024) ($bn)
India’s Top Export
Destinations (%
share)
Major Global Ex
-
porters (Share in
World Exports %)
Top Importers
of Auto Compo-
nents (%)
8708- Parts and ac
-
cessories for tractors,
motor vehicles for
the transport of >= 10
persons
451.2
USA (29.1), Turkiye
(6.8), Mexico (6.7)
Germany (14.2),
China (12.5), USA
(10)
USA (20), Germa-
ny (10.1), Mexico
(7.6)
4011- New pneumatic
tyres, of rubber
101.9
USA (17.2), Germany
(5.8), Brazil (5.4)
China (22.1), Thai
-
land (7.3), Germa-
ny (5.8)
USA (19.6), Germa
-
ny (8), France (4.8)
8409- Engine parts 74.5
USA (29.4), UK (9.1),
Germany (6.2)
Germany (18.7),
China (12.7), USA
(7.7)
USA (15.6), Germa
-
ny (8.8), Mexico
(5.8)
8407- Petrol engines 53.5
Indonesia (18.3), Tür
-
kiye (13.9), Bangla-
desh (11.2)
USA (14.6),
Germany (11.9),
Mexico (7.8)
USA (22.8), Mexico
(9.2), Germany
(8.9)
Source: ITC Trade Map
Parts and Accessories for Tractors and Motor Vehicles (HS Code 8708): The
USA, Germany, and Mexico account for a major share of global imports, reflecting
their roles as both consumption and assembly hubs. Germany, China, and the USA
dominate exports, mainly catering to mature automotive value chains. India’s export
basket is anchored by the USA, Türkiye, and Mexico, signalling strong integration
into aftermarket supply chains. Scaling precision manufacturing, investing in tooling
and electronic components, and aligning with global Tier-1 suppliers can help India
move into higher-value segments.
New Pneumatic Tyres (HS Code 4011): Global demand is concentrated in the USA
and Germany, while China dominates exports, followed by Thailand and Germany,
reflecting strong cost advantages and OEM linkages. India’s exports are largely US-
oriented, aligning with the world’s largest importing market, but penetration into
premium, OEM-driven European segments remains limited.
Engine Parts (HS Code 8409): This technology- and quality-intensive segment is
driven by demand in the USA, Germany, and Mexico, with global exports dominated
by Germany and China. India’s exports are primarily US-oriented, with limited
exposure to the UK and Germany, indicating a focus on aftermarket and selective
OEM supply chains. Expanding into higher-value segments will require stronger
testing infrastructure, certification, and consistent precision manufacturing.
Petrol Engines (HS Code 8407): Global demand in this segment remains significant,
with the USA and Germany dominating both exports and imports, reflecting
high technological intensity. India’s exports are concentrated in emerging and
price-sensitive markets such as Indonesia, Türkiye, and Bangladesh, indicating a
comparative advantage in cost-efficient internal combustion engine platforms
rather than advanced engine technologies.
Overall, the data underscore India’s expanding presence in global automotive trade,
particularly to emerging markets, alongside strong integration with the US market. 25Trade Watch April-June (Q1) FY26
At the same time, the continued dominance of Germany and China in technology-
intensive segments points to persistent capability gaps. Taken together, the evidence
highlights the importance of scaling quality manufacturing, broadening market
diversification, strengthening quality and certification ecosystems, and sustaining
policy support to consolidate India’s position within global automotive value chains
and maintain export momentum.
Global Automotive Success Stories: Policy and Structural Drivers
The global automobile industry has several distinct success stories that
illustrate how countries can rise to market leadership through different
pathways. Germany, Japan, Mexico, China and South Korea each stand out as
major players, but for very different reasons. Taken together, these cases show
that there is no single route to industrial leadership; instead, complementary
policies and capabilities, industrial strategy, global integration, and selective
support for technology and firms can create export-oriented, resilient
automotive sectors. These lessons offer valuable insights for India, which can
adapt them to its own institutional context and priorities.
I. Legacy Automotive Leaders: Germany and Japan
• Deep Industrial Ecosystems and Supplier Integration: Germany and
Japan built dense, highly coordinated automotive ecosystems marked by
close OEM–supplier relationships. Germany’s Mittelstand-driven supplier
base and Japan’s keiretsu-style networks enabled co-development,
quality control, and continuous incremental innovation across the value
chain.
• Workforce Development and Skill Alignment: Both countries invested
heavily in aligning human capital with industry needs. Germany’s dual
vocational education and training system institutionalised apprenticeships
linked directly to firm requirements, while Japan fostered firm-based
skill formation and lifetime employment practices that supported tacit
knowledge accumulation.
• Manufacturing Excellence and Process Innovation: Japan pioneered
lean manufacturing and just-in-time systems through the Toyota
Production System, while German firms focused on precision engineering
and advanced manufacturing processes. These approaches delivered
global productivity advantages and strong reputations for reliability and
quality.
• Sustained R&D and Technology Leadership: High and consistent
R&D investment underpinned leadership in powertrains, vehicle
safety, advanced materials, and production technologies. Germany’s
automotive firms remain among the world’s largest R&D spenders, while
Japan established early leadership in hybrid technologies through long-
standing fuel-efficiency standards. 26Trade Watch April-June (Q1) FY26
II. Emerging Automotive Powers: China, Mexico, and South Korea
• Strategic Use of Scale, Trade, and Market Access: China used its vast
domestic market to generate demand pull and achieve rapid industrial
scaling. Mexico leveraged geographic proximity and preferential access
under USMCA to integrate deeply into North American supply chains.
South Korea combined export orientation with diversification across
the US, EU, and Asian markets to reduce dependence on any single
destination.
• State-Led Capability Building and Policy Sequencing: China focused
on joint-venture requirements and localisation mandates to facilitate
technology transfer in early stages. South Korea supported national
champions such as Hyundai and Kia through R&D, strategic investments.
Mexico focused less on indigenous technology and more on creating an
attractive, predictable environment for global OEM investment.
• Large Domestic Market: China’s automobile industry has also benefited
from the sheer scale of its domestic market, one of the largest in the world,
which consistently absorbs over 30 million vehicle sales annually. This
large and stable home demand has enabled manufacturers to achieve
economies of scale, invest in technology especially EVs and build globally
competitive cost structures.
• Targeted Incentives and Cost Competitiveness: Mexico reinforced
competitiveness through lower labour costs and duty-free import
regimes for intermediates (IMMEX Program), reducing production costs
for export manufacturing. China and South Korea deployed targeted
fiscal incentives, tax breaks, and financing support, particularly during
periods of global demand volatility, to stabilise output and exports.
• Focus on New Technologies and Future Mobility: China gave decisive
push into electric vehicles, batteries, and critical minerals through New
Energy Vehicle (NEV) plan. South Korea adopted a technology-neutral but
future-oriented approach, expanding support for EVs, hybrids, hydrogen
vehicles, and autonomous mobility through enhanced subsidies and
emergency support for parts suppliers. These steps helped sustain export
momentum amid tariff pressures and market slowdowns.
• Cluster Development and Ecosystem Support: All three countries
supported geographic concentration of automotive activity. China
fostered large-scale industrial clusters linked to battery and EV
ecosystems; Mexico developed regional automotive hubs supported by
logistics and industrial parks; South Korea reinforced integrated domestic
supply chains to support rapid scaling and innovation diffusion. 27Trade Watch April-June (Q1) FY26
5. Assessing Automotive Performance through Units Sold
In contrast to earlier value-based export analyses, unit-level analyses of production,
sales, and exports offer a complementary perspective. This unit-based assessment
provides a clearer picture of volumes, scale efficiency, and market penetration,
particularly relevant for the automotive sector, where variations in product prices
and technological content can distort value-based comparisons.
Table 5: India’s domestic consumption and exports for vehicle units sold FY21 vs FY25
2020-212024-25 CAGR (2020-2024)
Exports/Produc
-
tion
Category
Produc
-
tion
Exports
Produc
-
tion
Ex
-
ports
Produc
-
tion
Ex
-
ports
2020-212024-25
Passenger
Vehicles
3.42 0.66 5.06 0.77 8.1% 3.1% 19.3% 15.2%
Commercial
Vehicles
0.76 0.06 1.03 0.08 6.4% 6.0% 8.0% 7.8%
Three Wheel
-
ers
1.13 0.50 1.05 0.31 -1.5% -9.4% 44.3% 29.2%
Two Wheel
-
ers
21.03 3.52 23.88 4.20 2.6% 3.6% 16.7% 17.6%
Quadricycles 0.01 0.01 0.01 0.01 1.3% 4.4% 85.1% 99.0%
Grand Total 26.35 4.75 31.03 5.36 3.3% 2.5% 18.0% 17.3%
Source: SIAM Statistics
Note: Volume in mn units
The data comparing production and export performance across vehicle categories
between FY20 and FY24 reveals a moderate recovery in India’s automotive sector
following the pandemic-induced slowdown.
Overall, total vehicle production rose from 26.35 million units in 2020–21 to 31.03
million units in 2024–25, marking a CAGR of 3.3%. Exports increased from 4.75 million
to 5.36 million units, growing 2.5% annually. Among the five segments examined,
two-wheelers have recorded positive growth in both production and exports. While
the three segments, namely passenger vehicles, commercial vehicles, and two-
wheelers, have shown an overall increase in production, the three-wheeler segment
has experienced a decline in both exports and domestic production.
Passenger vehicles show the highest production growth at 8.1%, driven by a sharp
rebound in domestic demand, with sales rising by about 2 million units. However,
exports grew at only 3.1%, and the export-to-production ratio declined from 19.3%
to 15.2%, indicating that most incremental output was absorbed domestically
rather than through external demand. Despite having the third-largest automotive
market, India has one of the lowest numbers of registered cars per 1000 people at
44, compared to China at 251 and South Korea at 422.
23
23 https://www.ibef.org/news/india-may-outpace-china-in-car-sales-growth-says-moody-s-ratings Among the top ten car
manufacturers by domestic sales volume, India features only two domestically owned firms i.e. Tata Motors and Mahin-
dra & Mahindra while the remaining positions are occupied by foreign-owned subsidiaries or joint ventures. By contrast,
China’s top ten includes at least five domestically owned manufacturers, and Japan’s top ten consists entirely of Japanese
firms for 2024. 28Trade Watch April-June (Q1) FY26
Commercial vehicles also recorded solid growth, with production and exports
rising at similar rates (6.4% and 6% respectively). Export intensity remained nearly
constant, around 8%, suggesting stable external demand. In contrast, three-wheelers
contracted, with production falling marginally and exports declining sharply by
9.4% annually. The export-to-production ratio dropped from 44.3% to 29.2%. Two-
wheelers, the largest segment, exhibited modest production and export growth
(2.6 and 3.6%, respectively). The export share of production remained broadly stable,
increasing slightly from 16.7 to 17.6%. Quadricycles, though a negligible segment in
absolute terms, show high export intensity; nearly all units produced are exported,
highlighting their niche role in India’s export portfolio. (Table 5)
6. Intra-Industry Trade Analysis
To assess India’s positioning in global automotive value chains and benchmark it
against leading automobile producers, this analysis examines not only the scale
of trade but also its underlying structure. By jointly analysing imports, exports,
applied tariffs, and the Grubel–Lloyd intra-industry trade (IIT)
24
index, the table helps
distinguish between protected, one-way export specialisation and deeper two-
way integration within cross-border production networks. The analysis covers four
major automobile product groups: passenger vehicles, goods vehicles, tractors, and
motorcycles for India, Germany, China, and South Korea, which together account for
93.5% of global automobile demand in 2024.
India’s trade in finished vehicles is characterised by comparatively high applied
tariffs and low IIT, indicating a protected domestic market combined with export
specialisation rather than a two-way model exchange. Tariffs exceed 80–100% for
passenger vehicles and motorcycles, while IIT remains below 20% across most
categories, suggesting limited integration into cross-border vehicle platforms.
Table 6: Comparison of Intra-Industry Trade with Select Economies for Automobiles, 2024
HS
code
Product
IndiaGermanyChinaSouth Korea
Im
-
ports
Ex
-
portsApplied
Tariff
IIT
Im
-
ports
Ex
-
ports
Ap
-
plied
Tariff
IIT
Im
-
ports
Ex
-
ports
Ap
-
plied
Tariff
IIT
Im
-
ports
Ex
-
ports
Ap
-
plied
Tariff
IIT
‘8701Tractors0.02 1.18.3% 3% 3.610.73.0%50%0.27.46.2% 7% 0.30.83.9%53%
‘8703
Passen
-
ger Vehi-
cles (<=10
persons)
0.6 6.9103.9%17%72.6175.83.5%58%38.390.230.8%60%12.168.34.5%30%
‘8704
Motor
vehicles
(goods)
0.07 1.432.8% 9% 9.912.34.8%89%0.613.915.1%9% 0.61.85.2%49%
‘8711
Motorcy
-
cles
0.07 3.281.0% 4% 2.83.42.2%89%0.414.537.3%5% 0.40.014.5%5%
Source: ITC Trade Map
Note: Values in bn dollars
24 The value is computed as follows: IIT = 1- (|Xi-Mi|/Xi+Mi), where Xi denotes the exports of the respective product and Mi
denotes the imports of the respective product. 29Trade Watch April-June (Q1) FY26
In contrast, Germany and South Korea exhibit low tariffs and high IIT, reflecting dense
two-way trade in differentiated vehicles and deep participation in global production
networks. China imposes moderate tariffs but relatively higher IITs on passenger
vehicles, consistent with its dual role as both a large exporter and importer of vehicle
models. Overall, India’s automobile exports appear driven by cost competitiveness
and domestic value chains, rather than by integration into globally fragmented
vehicle production. (Table 6)
Table 7: Comparison of Intra-Industry Trade with Select Economies for Auto Components, 2024
HS
code
Product
IndiaGermanyChinaSouth Korea
Im-
ports
Ex
-
ports
Applied
Tariff
IIT
Im
-
ports
Ex
-
ports
Ap
-
plied
Tariff
IIT
Im
-
ports
Ex
-
ports
Applied
Tariff
IIT
Im
-
ports
Ex
-
ports
Ap
-
plied
Tariff
IIT
8708
Vehicle
parts
6.27.512.4%90%45.464.41.2%83%21.256.710.1%54% 5.2 18.84.5%43%
4011
New
pneu
-
matic
tyres, of
rubber
0.22.99.8%13% 8.1 5.81.4%84% 0.822.211.3%7% 1.1 3.42.8%51%
8409
Engine
parts
1.51.611.2%97% 6.614.00.9%64% 3.3 9.5 4.4%51% 1.3 3.34.4%56%
8407
Petrol
engines
0.30.511.4%75% 4.7 6.40.0084% 0.8 3.410.7%41% 1.2 1.54.3%89%
Source: ITC Trade Map
Note: Values in $ bn
A contrasting pattern emerges in auto components. India records very high IIT
in several component categories, notably vehicle and engine parts, two highly
demanded products worldwide, despite moderate tariff protection and a relatively
small global export share. Germany and South Korea display high IIT alongside low
tariffs, reflecting advanced, technology-intensive supply chains. China combines
scale with moderate IIT, reinforcing its position as a manufacturing hub. For India,
the evidence suggests meaningful integration into global automotive value chains
at the component level, though primarily at mid-chain positions, rather than
technological or platform leadership. (Table 7)
7. India’s presence in the Global Value Chain for Automobile
India’s automobile sector has seen a steady rise in its participation in global value
chains (GVCs) over the past decade. GVC-related trade as a share of gross trade
increased from 32% in 2015 to 46% by 2024, with the sharpest gains occurring
after 2020. This increase reflects deeper integration with international production
networks, driven by higher sourcing of intermediate components, growing export
orientation, and linkages with global manufacturers. 30Trade Watch April-June (Q1) FY26
Fig 22: Components of India’s Gross Trade for Automobile
32%
40% 39%
43% 46% 46%
68%
60% 61%
57% 54% 54%
0
20
40
60
80
100
2015 2017 2019 2021 2023 2024
GVC-related trade % gross trade Traditional Trade % gross trade
Source: WITS
In contrast, traditional trade, which is largely characterised by end products, fell
from 68% in 2015 to 54% in 2024. The declining share of traditional trade indicates
a structural shift in the sector towards more fragmented, multi-stage production
processes rather than purely final-goods trade. The period after 2020 shows this
transition most clearly, coinciding with a rise in both auto component imports and
the export of assembled vehicles and components. (Fig 22)
Fig 23: Components of India’s GVC Trade for Transport Equipment
9 10 11 9
14 13
20
25 24
29
25 26
3
4
4
5
6 6
0
10
20
30
40
50
2015 2017 2019 2021 2023 2024
Two-sided GVC participation (GVCBF) % trade
Pure backward GVC participation (GVCPB) % trade
Pure forward GVC participation (GVCPF) % trade

Source: WITS
India’s automobile sector has experienced a gradual deepening of global value
chain (GVC) integration across all major channels: forward, backward, and two-sided
participation between 2015 and 2024.
Pure backward GVC participation, which reflects India’s use of imported intermediates
in its automobile production, has remained the dominant mode of integration. It
increased from 20% in 2015 to 26% in 2024, with a peak of 29% in 2021–22. This pattern
is consistent with India’s expanding reliance on foreign components particularly
electronics, high-precision parts, and EV-related inputs as production volumes and 31Trade Watch April-June (Q1) FY26
model complexity have increased. The rise in backward linkages aligns with India’s
broader integration into regional and global supply networks, supplemented by
multinational OEM localisation and the China-plus-one shift.
Pure forward GVC participation, measuring India’s export of intermediates used in
other countries’ production processes, also shows a mild upward trend from 9% in
2015 to about 13% in 2024, with the highest increase occurring after 2021. Although
forward participation remains lower than backward participation, the upward trend
reflects the steady growth of India’s auto-component export base, especially in
forgings, casting parts, engine components, and wiring harnesses.
Two-sided GVC participation, representing simultaneous export and import of
intermediate products, has risen from 3% in 2015 to 6% in 2024, indicating deeper
cross-border fragmentation of production. The sharp increases after 2020 point to
both manufacturers’ diversification of sourcing strategies and greater participation in
multi-stage production networks. This shift mirrors the automotive industry’s global
transition toward modular production, electronics-heavy vehicle architectures, and
globally dispersed supplier ecosystems. (Fig 23)
8. Foreign Investment
25
Trends in the Automobile Industry
Globally, FDI in global value chain (GVC)- intensive manufacturing industries have
remained steady in 2024. Investments here are driven by projects focused on EVs. The
number and aggregate value of greenfield project announcements in the automotive
sector have increased marginally from 732 projects valued at $60 bn in 2022 to 942
projects valued at $85 bn in 2024. However, this industry is also undergoing supply
chain restructuring due to the emerging tariff landscape.
26

The automotive industry continues to be an important contributor to global
greenfield activity. It accounts for one of the top ten industries in terms of value of
greenfield investments as well as the number of projects for 2024.
27
In India, foreign
direct investment for the automobile sector was relaxed in 2000, when 100% FDI
was permitted through the automatic route. The automobile sector remains among
the key industries in which domestic producers retain a substantial share of the
domestic market across multiple vehicle segments.
28
Foreign equity inflows into India’s automobile sector have remained relatively stable
in absolute terms over the past decade but have declined as a share of total FDI,
falling from about 7.8% in 2014 to 3–4% in recent years. This trend reflects a broader
structural shift in India’s FDI composition, with inflows increasingly directed toward
technology-intensive and service-oriented sectors such as software, business
services, and telecom. As total FDI has expanded, particularly in digital and high-
growth segments, automobile inflows have not kept pace, due to localisation norms
and the focus of manufacturers on domestic production and sales.
25 Foreign Direct Investment comprises of the sum of Equity Inflow, Reinvested Earnings and Other Capital, we have ana-
lyzed only FDI Equity Inflow. FDI Equity Inflow forms the major component.
26 https://unctad.org/system/files/official-document/wir2025_en.pdf
27 https://unctad.org/system/files/official-document/wir2025_en.pdf
28 https://isid.org.in/wp-content/uploads/2023/01/WP255.pdf 32Trade Watch April-June (Q1) FY26
Fig 24: FDI Trends in the Automobile Industry
2.21.91.51.51.9
28.6
43.6
64.7
41.3
53.1
7.8%
4.3%2.3%
3.7%
3.5%
0%
2%
4%
6%
8%
10%
0
20
40
60
80
2014 2017 2020 2023 2024
Total FDI Equity Inflow
Automobile Equity Inflow
Proportion of Equty FDI Inflow in Automobile (RHS)

Source: CEIC
Note: Values in bn dollars
The automobile industry’s capital-intensive nature, exposure to global supply chain
disruptions, and an ongoing technological transition toward electric mobility have
also shaped investor behaviour. Exports as a percentage of sales as per data from
SIAM has remained stable between 17-18% throughout 2019-20 to 2024-25 indicating
an acute focus on domestic markets.
Heightened global uncertainty, tighter financial conditions, and evolving risk
assessments have encouraged foreign investors to prioritise more scalable, lower-
risk sectors. At the same time, rising localisation, reinvestment of earnings by
established players, and policy incentives under schemes such as PLI may have
reduced the need for large new equity infusions. Together, these factors explain why
the sector’s proportional contribution to India’s FDI landscape has moderated even
as its strategic importance and production footprint continue to expand. (Fig 24)
9. Technology Transition: EVs & Future Mobility
The global electric vehicle (EV) market has expanded rapidly over the past five years,
with battery-electric vehicles (HS 870380) emerging as one of the fastest-growing
automotive trade categories. World imports rose sharply from USD 4.6 billion in 2020
to around USD 150 billion in 2024, reflecting a decisive global shift away from internal
combustion engines towards cleaner, high-efficiency mobility systems in line with
net-zero commitments.
India’s EV exports increased from $1.2 mn in 2020 to $84 mn in 2024, showing high
growth but still accounting for about 0.1% of global exports ($145 bn). On the import
side, India sourced $211 mn worth of EVs in 2024, also about 0.1% of global imports,
indicating a limited presence in both directions. India’s trade balance in EVs has
remained negative throughout, widening from –$1.1 mn in 2020 to –$170.5 mn in
2024. This reflects India’s rising domestic adoption needs and import dependence
for high-end electric cars and specific components. (Fig 25) 33Trade Watch April-June (Q1) FY26
Fig 25: India’s EV Exports Vs ImportsFig 26: Top Global EV Exporters, 2024
0
50
100
150
200
250
2020 2021 2022 2023 2024
USD Mn
India’s Exports (USD Mn)
India’s Imports (USD Mn)
29.5
23.2
9.2
7.3
5.9
Germany
China
Belgium
Korea, Republic of
Mexico
Source: ITC Trade Map
Note: value shows % share in total
The global EV export market is highly concentrated. China and Germany together
account for ~50% of world EV exports, supported by deep manufacturing ecosystems,
advanced battery industries, high R&D spending, and strong brand presence. China’s
vertical integration across the entire electric vehicle supply chain, from mining to
EV manufacturing, has enabled it to retain its global dominance in this sector.
29

Emerging hubs like Belgium and Mexico have also strengthened their position due
to favourable logistics, charging-ready infrastructure, and integration into major
automotive supply chains. On the import side, the USA, UK, Belgium Germany, and
France constitute the world’s largest EV buyers (~ 48%). These markets demand
high-quality, feature-rich EVs, a segment where India’s presence is minimal today
but could evolve as domestic capabilities deepen. (Fig 26)
Fig 27: India’s EV Exports Destinations, 2024 Fig 28: World’s EV Exports Destinations, 2024
46.4
20.9
20.1
3.9
1.6
Nepal
Indonesia
Japan
Germany
Bhutan
16
10.4
10
6
5.7
USA
UK
Belgium
Germany
France
Source: ITC Trade Map
Note: value shows % share in total
India’s EV trade shows a clear difference between exports and imports. On the
export side, India mainly sells small and affordable EVs, with neighbouring countries
continuing to be major buyers, Nepal alone has taken a large share for many years
(46.4% in 2024). Newer Asian markets like Indonesia (20.9%) and Japan (20.1%) have
also started to feature, along with smaller shipments to developed countries. (Fig 27
and 28)
29 Economic Survey 2024-25 34Trade Watch April-June (Q1) FY26
On the import side, India still depends heavily on more advanced EV-producing
countries. Germany remains the top source, largely due to high-end car imports, while
China’s share rose to 24.1% in 2024 because of both components and competitively
priced vehicles. The US, Sweden and the UK also contribute smaller shares. Overall,
India tends to export lower-value models while importing higher-spec vehicles
and key components, reflecting the stage of development of its EV manufacturing
ecosystem. India’s heavy dependence on imported battery-manufacturing equipment
and advanced technologies has direct implications for its trade competitiveness and
long-term positioning in the global EV value chain. Without domestic capabilities in
high-precision machinery and next-generation battery technologies, India remains
locked into the lower end of the global supply chain, exporting largely assembled
products while importing the most value-intensive components. This structural gap
limits India’s ability to scale exports of high-value battery cells, packs, and power
electronics, especially as global leaders consolidate their dominance through tight
technology control and vertically integrated supply chains. As international markets
increasingly shift toward advanced chemistries and stringent quality standards, India
risks losing ground unless it builds domestic capability in manufacturing equipment,
testing infrastructure, and process innovation. Strengthening these capabilities,
through targeted FDI, technology partnerships, and dedicated equipment-testing
centres, is essential for India to move up the value chain, reduce import dependence,
and position itself as a credible exporter in the global EV and battery ecosystem.
30
10. Recent Developments in India’s Trade Policies: Key Updates for the Automo -
bile Sector
●Automotive Mission Plan 2047 (AMP 2047)
31
: Launched by the Ministry of
Heavy Industries, this is an industry-led strategic roadmap that aims to make
the Indian automotive industry globally competitive by setting concrete targets
for growth, exports and technological advancement. AMP 2047 brings together
stakeholders: OEMs, auto-component makers, policymakers and research
agencies and constituted seven expert sub-committees to draft a comprehensive
plan with milestone goals for the years 2030, 2037 and 2047.
●GST Rationalisation
32
: India’s GST rationalisation in September 2025 marks a
landmark reform for the automobile sector. By reducing tax rates across vehicles
and components, the government aims to boost affordability, demand, MSME
growth, and global competitiveness.
»Two-Wheelers (≤350cc): GST cut from 28% to 18%, making bikes more
accessible for rural and semi-urban households, farmers, gig workers, and
youth.
»Small Cars: GST reduced from 28% to 18%, encouraging first-time buyers and
expanding mobility in smaller towns.
»Large Cars: GST rationalised to a flat 40% with no cess, simplifying taxation
and allowing full Input Tax Credit (ITC).
»Auto Components: Majority reduced to 18%, lowering manufacturing costs
and supporting MSMEs in tyres, batteries, glass, steel, plastics, and electronics.
30 Unlocking Supply Chains for Localizing Electric Vehicle Battery Production in India, IISD
31 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2154131
32 https://www.pib.gov.in/FactsheetDetails.aspx?Id=149276 35Trade Watch April-June (Q1) FY26
»Tractors (<1800cc): GST cut from 12% to 5%; parts like tyres, tubes, hydraulic
pumps reduced from 18% to 5%.
»Commercial Goods Vehicles (trucks, vans): GST reduced from 28% to 18%,
lowering freight costs, improving logistics efficiency, and enhancing export
competitiveness.
»Buses: GST reduced from 28% to 18%, making public transport more
affordable, encouraging fleet expansion, and reducing congestion/pollution.
●Scheme to Promote Manufacturing of Electric Passenger Cars in India
(SPMEPCI)
33
: The Ministry of Heavy Industries (MHI) notified detailed guidelines
under SPMEPCI. Under this scheme, approved applicants (global or domestic
automakers) importing completely built-up electric 4-wheelers (with CIF value ≥
$35,000) will be eligible for a reduced customs duty of 15% for five years from the
date of approval. This requires applicants to invest a minimum of Rs. 4,150 crore
and to achieve a minimum domestic value addition (DVA) of 25% at the end of
the third year and 50% at the end of the fifth year. This landmark initiative aligns
with India’s national goals of achieving Net Zero by 2070, fostering sustainable
mobility.
●Production Linked Incentive (PLI) Scheme for Automobile and Auto
Components
34
: The Government notified this scheme on 23 September 2021
for the Automobile and Auto Component Industry in India for enhancing India’s
manufacturing capabilities for Advanced Automotive Technology (AAT) products
with a budgetary outlay of INR 25,938 Crore. The scheme proposes financial
incentives to boost domestic manufacturing of AAT products with a minimum
50% Domestic Value Addition (DVA) and attract investments in the automotive
manufacturing value chain.
●Faster Adoption and Manufacturing of Electric Vehicles in India (FAME
India) Phase II
35
: Launched in April 2019 with a total outlay of ₹10,000 crore, the
scheme supports EV adoption by subsidising electric 2-wheelers, 3-wheelers,
and 4-wheelers (over 8.3 lakh EVs supported so far) and expanding charging
infrastructure through the sanctioning of 4,400+ public charging stations, while
also complementing GST reductions and PLI incentives to accelerate India’s
transition to clean mobility.
●PLI Scheme for Advanced Chemistry Cell (ACC)
36
: The Government, on 12 May
2021, approved the PLI Scheme for the manufacturing of ACC in the country
with a budgetary outlay of INR 18,100 Crore. The scheme aims to establish a
competitive domestic manufacturing ecosystem for 50 GWh of ACC batteries.
●PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM
EDRIVE) Scheme
37
: Approved in October 2024 with a financial outlay of ₹10,900
crore seeks to accelerate EV adoption and develop India’s EV manufacturing
ecosystem by offering demand incentives for e-2-wheelers, e-3-wheelers,
e-buses, e-ambulances, e-trucks, and by funding charging-station infrastructure
and testing-facility upgrades. of vehicle testing agencies.
33 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2133258
34 https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/mar/doc2025325526201.pdf
35 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1942506
36 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2114919
37 https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=153264&ModuleId=3&reg=3&lang=1 36Trade Watch April-June (Q1) FY26
11. Industry Insights on Strengthening India’s Automotive Trade Performance
India’s automotive sector has emerged as a global manufacturing hub, supported
by scale, engineering capabilities, and a strong domestic market. However, despite
robust production growth, particularly in passenger vehicles, two-wheelers, and
components, export performance has shown signs of stagnation across several
markets. Discussions with industry stakeholders
38
highlighted a range of structural,
policy, and market-access constraints that continue to limit India’s ability to scale
automotive exports and deepen integration into global value chains. The biggest
challenge is that almost every country seeks to become an automobile manufacturer
and exporter because of the industry’s strong job-creation potential; however,
this proliferation limits manufacturers’ ability to achieve scale economies, thereby
constraining exports. The key insights and recommendations emerging from the
consultation are summarised below:
i. Addressing Export Incentive Gaps and Financing Constraints
While automotive exports recorded growth in 2024, existing export support
mechanisms remain inadequate. Current RoDTEP rates were noted to be
insufficient to offset embedded taxes and logistics costs, especially in price-
sensitive markets. Export competitiveness is further constrained by limited
access to affordable export finance, particularly in developing markets where
retail and distributor financing plays a critical role in driving vehicle sales.
Stakeholders emphasised the need to enhance RoDTEP rates, revise duty
drawback structures, and strengthen banking support for automotive export
financing, including through region-specific financing solutions.
ii. Managing Market Access Barriers and Non-Tariff Measures
A key constraint to export expansion is the rise in non-tariff barriers (NTBs)
across developed and developing markets. Indian exporters face diverse
regulatory checks, quarantine norms, and documentation requirements,
resulting in higher compliance costs and delays. Examples include stringent
vehicle quarantine regulations in Australia, customs-related bottlenecks in Sri
Lanka despite localisation mandates, and varying regulatory standards across
ASEAN economies. Industry highlighted the need for greater government-
to-government engagement to address these barriers, including negotiating
Mutual Recognition Agreements (MRAs), improving customs cooperation, and
ensuring smoother re-import processes for components required for testing
and root-cause analysis.
iii. Strategic Engagement with Key and Emerging Markets
India’s export push needs to be recalibrated toward neighbouring and
emerging markets such as Sri Lanka, Nepal, Africa, and Latin America, where
significant untapped demand persists. While markets like Sri Lanka and Nepal
remain critical for Indian exports, rapid EV adoption in Nepal and competition
from Chinese EVs pose new challenges. Similarly, changes in Mexico’s tariff
structure, now favouring local manufacturing over imports, have reduced
export opportunities for India. There is a need for proactive trade diplomacy,
38 A stakeholder knowledge-sharing session was held to gather industry insights on challenges and strategies for boosting
India’s global competitiveness in the automotive sector. 37Trade Watch April-June (Q1) FY26
including structured dialogues with Mexico and Indonesia, expansion of FTAs
with African and Latin American economies, and greater use of Lines of Credit
(LoCs) to support vehicle and bus exports, particularly in Africa.
Fast-tracking the India–US Free Trade Agreement can help improve market
access for Indian exports and enhance business predictability across the two
markets.
iv. Reassessing the Design and Coverage of the PLI-AUTO Scheme
The current design of the PLI-AUTO Scheme presents certain limitations,
particularly its strong focus on electric vehicles and high domestic value-
addition thresholds. While the scheme aims to promote localisation and
advanced technologies, the 50% domestic value-addition requirement and
eligibility thresholds may constrain the participation of startups and smaller
firms, potentially leading to segmentation within the industry. As a result,
investment momentum, especially in pure EV segments, has remained
limited. A mid-course review of the scheme could help broaden its coverage,
consider the inclusion of non-EV segments, and recalibrate eligibility norms to
support a more inclusive and investment-friendly framework.
v. Cost Competitiveness, Logistics, and Scale Constraints
High logistics costs, both inland and port-related, continue to pose a
significant constraint on export competitiveness and on achieving economies
of scale. Inefficiencies in transportation from manufacturing clusters to ports,
combined with elevated shipping costs, erode margins and weaken India’s
competitive position relative to global peers. India’s logistics cost currently
stands at ~8% of GDP
39
.
Cost disadvantages are further amplified for critical inputs, particularly
batteries, where reliance on imported lithium-ion cells significantly raises FOB
prices compared to competitors benefiting from integrated supply chains and
state support. Addressing these constraints requires targeted interventions to
reduce logistics costs, strengthen domestic supply chains for critical inputs,
and enable scale-driven cost efficiencies.
vi. Quality Standards, Branding, and Global Positioning
Indian automotive products are increasingly recognised for quality and
reliability; however, the proliferation of low-priced, substandard imports
continues to distort markets and undermine fair competition.
Strengthening domestic quality and regulatory standards, alongside
stricter enforcement against dumping and non-compliant imports, is
therefore essential. In parallel, reviving and strengthening Indian Brand
Equity Foundation (IBEF) can play a central role in improving India’s global
branding and market visibility by positioning “Made in India” as a credible and
competitive label, supported by stronger and more coordinated participation
in international trade fairs and a more proactive role for Indian embassies in
facilitating linkages with distributors, dealers, financiers, and strategic partners
in overseas markets.
39 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2195125&reg=3&lang=2 38Trade Watch April-June (Q1) FY26
vii. Limited Domestic Manufacturing of EV Battery Components
India’s EV battery ecosystem remains largely assembly-oriented rather than
manufacturing-led. While cell and battery pack production has begun,
critical inputs such as cathode and anode materials, electrolytes, separators,
and refined lithium, cobalt, nickel, and manganese remain predominantly
imported from China. This dependence constrains domestic value addition,
limits supply chain resilience, and poses a structural challenge to scaling
India’s EV manufacturing competitiveness. Even with the existing PLI, the cost
disadvantage for manufacturers remains high. Importing is still the preferable
for Indian manufacturers due to cost differences.
viii. Rise of Counterfeit Products in the Auto Components Markets
The automotive industry faces a growing challenge from counterfeit
components, which poses serious risks to road safety, consumer confidence,
and legitimate businesses. As per the ASPA–CRISIL Report (2022), nearly 50% of
the automotive parts market
40
, including critical components such as brakes,
suspension systems, transmission parts, and consumables, is exposed to
counterfeiting. Of this, around 20–25% is estimated to consist of fake products.
The report also notes that counterfeiters increasingly replicate authenticity
features, such as genuine part stickers, enabling them to sell fake components
at lower prices. disrupts the formal supply chains of authorised manufacturers
and suppliers, affecting their market shares in foreign markets.
ix. Need for Research and Development (R&D) benefits
Strong R&D is critical for Indian auto firms to enhance global competitiveness,
as global peers outperform them by 3.1 times in R&D intensity and 29.8 times in
patents per USD billion revenue.
41
Indian firms typically generate fewer patents
and publications per unit of revenue, underscoring the need to strengthen
their focus on innovation and intellectual property. Lower R&D intensity limits
the development of advanced technologies (e.g., EV powertrains, ADAS,
connected mobility) needed for global competitiveness.
12. Way Forward
The deliberations highlight that India’s automotive sector stands at a critical
juncture: while production capabilities and domestic demand remain strong, export
growth is constrained by policy design gaps, cost disadvantages, and evolving global
trade dynamics. Sustaining export momentum will require a coordinated strategy
that aligns incentives, market access, financing, and branding with long-term
competitiveness. The following priority actions are recommended:
i. Industrial Policy and Domestic Capability Building
●Upgrade Quality, Branding, and Global Outreach: Strengthen regulatory
standards to curb low-quality imports, improve India’s branding at
global platforms, and align embassy KRAs (Key Result Areas) with export
promotion objectives to support sustained market penetration.
40 https://www.motorindiaonline.in/from-fake-to-fatal-building-trust-with-advanced-anti-counterfeit-technologies/
41 https://www.fast-india.org/wp-content/uploads/2024/06/Automobile_Sectoral_Brief.pdf 39Trade Watch April-June (Q1) FY26
●Strengthen Technology Transfer: Foreign joint ventures can equip the
automotive industry to cater to the growing and changing demand
of the industry. China’s experience shows how targeted foreign joint
ventures can accelerate technology upgrading, quality improvements,
and global market access in auto components. Partnerships like
Wanxiang–BorgWarner have enabled the domestic company to produce
turbochargers used in high-end cars like Ford Mustang, illustrating how
tech transfer can help domestic firms move into high-value segments.
42
ii. Export Competitiveness and Cost Structure
●Strengthen Export Financing: Rationalise RoDTEP and duty drawback
rates and expand tailored export financing solutions, particularly for
emerging and developing markets where retail credit is a key demand
driver.
●Reduce Logistics and Input Cost Disadvantages: Focus on lowering
inland and port logistics costs, while accelerating domestic manufacturing
of critical inputs such as batteries to improve price competitiveness in
global markets.
iii. Market Access and Trade Facilitation
●Deepen Trade Diplomacy and Market Diversification: Leverage FTAs
with USA & Mexico for securing stable market access, Lines of Credit and
embassy-led facilitation to expand presence in Africa, Latin America, and
neighbouring markets, while addressing tariff and regulatory challenges
in key destinations like Mexico and ASEAN economies.
●Non-Tariff Barriers as a Binding Constraint: Enhance government-
to-government engagement to negotiate MRAs, streamline regulatory
compliance, and reduce market-specific NTBs that raise costs for Indian
exporters.
●Recalibrate the PLI-AUTO Framework: Undertake a mid-course evaluation
to broaden scheme coverage beyond EVs, ease eligibility thresholds for
startups and MSMEs, and ensure that localisation goals are aligned with
domestic demand realities.
42 https://www.niti.gov.in/sites/default/files/2025-06/Automotive%20Industry%20Powering%20India’s%20participation%20
in%20GVC_Non%20Confidential.pdf C.
POLICY AND
GEOPOLITICAL
HIGHLIGHTS 42Trade Watch April-June (Q1) FY26
C. Policy Highlights
1. Global Trade–Related Policy Updates
●ASEAN and China sign upgraded free-trade pact (“FTA 3.0”): On 28 October
2025, ASEAN and China signed an upgraded free-trade agreement (“FTA 3.0”). The
pact expands beyond tariff reductions to include digital trade, green economy
cooperation, and supply-chain facilitation. The upgrade comes amid rising
trade tensions with the United States, reflecting China’s strategy to consolidate
regional trade ties and position ASEAN–China as an alternative trade hub. A
more integrated Asia–ASEAN supply-chain bloc may reorient global trade flows,
reduce dependency on Western supply chains, strengthen resilience, and create
new opportunities for aligned firms and countries.
●U.S. exempts reciprocal tariffs on over 200 agricultural products: On 14
November 2025, the White House issued an executive order exempting hundreds
of agricultural goods, including coffee, tea, tropical fruits, cocoa, and beef, from
the broad reciprocal tariffs introduced earlier in 2025. These moves, alongside
new reciprocal trade frameworks with ASEAN and Latin American partners,
signal a shift toward protectionist yet selective liberalisation. The dual approach,
assertive tariff imposition coupled with targeted exemptions, underscores how
U.S. trade policy is being used as a geopolitical lever to secure supply chains,
incentivise reshoring, and rebalance trade deficits.
●Mexico’s Tariff Hike Threatens non-FTA partners exports: Mexican Senate
has approved a bill which will impose higher MFN tariffs of 5–50% from January
2026 on imports from non-FTA partners, including India, China, Brazil and several
other countries covering over 1,450 tariff lines. The move, aimed at protecting
domestic industry and correcting trade imbalances, is expected to hurt Indian
exports such as automobiles, auto components, chemicals, and electronics, with
the auto sector to be acutely affected. India has engaged Mexico diplomatically,
seeking concessions while reserving the right to take counter-measures.
The development has intensified momentum to fast-track India–Mexico FTA
negotiations to insulate trade from future tariff shocks.
2. India’s Trade Policy Developments
●New Export Promotion Mission (EPM) with ₹ 25,060 crore outlay
43
: The
government’s Cabinet approved a six-year Export Promotion Mission worth

₹ 25,060 crore to support exporters, especially in labour-intensive and affected
sectors (textiles, leather, gems & jewellery, engineering goods, marine products).
●Credit & export-credit relief via Reserve Bank of India (RBI)
44
: In response
to global trade headwinds and export stress, the RBI extended export-credit
timelines, increasing the maximum credit period for pre-shipment and post-
shipment export credit from 270 days to 450 days (for credits disbursed up to
March 31, 2026).
43 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189383
44 https://fieo.org/mailFiles/1763273613_RBI_Relief_Measures_14-11-25.pdf 43Trade Watch April-June (Q1) FY26
●RoDTEP Scheme Extension, Alignment & Restoration
45
: DGFT extended
RoDTEP benefits for DTA, AA, SEZ and EOU units up to 31 March 2026, aligned
the rates with the amended Customs Tariff Schedule effective 1 May 2025, and
restored RoDTEP support for exports manufactured by AA, SEZ and EOU units
from 1 June 2025, with updated rates/HS codes reflected in Appendices 4R/4RE.
●India–EFTA Trade & Economic Partnership Agreement (TEPA)
46
: India’s TEPA
with EFTA took effect on 1 October 2025, committing $100 bn in investments
and 1 million direct jobs over 15 years, offering extensive tariff liberalisation (EFTA:
92.2% lines; India: 82.7%) while safeguarding sensitive sectors, and expanding
market access in manufacturing, technology, sustainability and digitally delivered
services supported by MRAs.
3. Commodity Price Trends
From September 2024 to September 2025, global commodity movements reflect
a transition from demand-driven weakness to a broad-based recovery shaped by
monetary easing, supply adjustments, and shifting geopolitical pressures. The all-
commodity index stabilised after its September 2024 low as global growth prospects
improved and inventory restocking began in early 2025. The crude oil index continued
to decline through mid-2025 after peaking in Jan’25 at 193.26 and has declined since
then. Throughout 2025, oil prices trended downward as persistent trade-policy
frictions and worries about oversupply weighed on the market, interrupted only by
brief spikes driven by geopolitical disruptions. Oil consumption is expected to be
stable across advanced economies but will moderate due to the adoption of electric
and hybrid vehicles in China. India, which continues to be a major contributor to the
growth, is expected to drive the demand for LPG, gasoline, diesel and naphtha.
47
Fig 29: Price indices across key commodity indices
100
140
180
220
260
300
All commodity indexAPSP crude oil($/bbl)Food index
Coal indexMetal indexPrecious Metals Index
Source: IMF
Food prices experienced mild softening as favorable harvests in major producers
and normalized Black Sea grain flows improved global availability. Food prices are
expected to further decline throughout 2025 on account of record-high production
worldwide for maize, rice, soybeans and wheat during the 2023-24 season.
48
Coal
prices fell sharply in early 2025, driven by declining power-sector use in Europe and
45 https://www.dgft.gov.in/CP/?opt=RoDTEP
46 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2177724&reg=3&lang=2
47 https://blogs.worldbank.org/en/opendata/oil-market-glut--surging-output-and-sluggish-demand-pressure-pri
48 https://blogs.worldbank.org/en/developmenttalk/the-commodity-markets-outlook-in-eight-charts0 44Trade Watch April-June (Q1) FY26
China and rising renewable penetration. However, throughout 2026 and 2027, coal
consumption is expected to be stable due to rising demand from India and China,
which will offset the declining demand in the European Union and the United
States.
49
Metals saw the highest recovery: after subdued levels in late 2024, prices surged
from early 2025 on the back of renewed construction demand, higher green-
technology consumption of copper, nickel and aluminium. September particularly
saw an uptick in the index value on account of China’s stimulus package. Prices are
expected to remain stable for the rest of 2025, with a slight decline by 3% in 2026 as
industrial activity recovers.
50
Precious metals rose steadily throughout the period as global interest rate cuts,
heightened geopolitical risks, and central bank gold purchases supported safe-haven
demand. Gold is poised to set new highs next year, supported by safe-haven demand and
continued central-bank purchases. Silver is also expected to strengthen further, driven
by rising industrial use, particularly from renewable energy applications, alongside safe-
haven interest. At the same time, constrained supply is likely to continue supporting
platinum markets. Even so, the outlook remains highly uncertain. A renewed surge in
geopolitical tensions or increased policy uncertainty could push gold above current
forecasts. In contrast, weaker industrial activity could weigh on silver and platinum,
bringing their prices below baseline projections.
51
(Fig 29)

49 https://blogs.worldbank.org/en/opendata/global-coal-markets-at-a-crossroads--soft-demand--resilient-sup
50 https://blogs.worldbank.org/en/developmenttalk/the-commodity-markets-outlook-in-eight-charts0
51 https://blogs.worldbank.org/en/opendata/when-uncertainty-rises--gold-rallies 45Trade Watch April-June (Q1) FY26
Contributors
Pravakar SahooProgramme Director, NITI Aayog
Amit VermaDirector, NITI Aayog
Nalina SofiaDirector, NITI Aayog
Jyotika NagvanshiDeputy Director, NITI Aayog
Mala ParasharConsultant-I, NITI Aayog
Pooja TeotiaConsultant-I, NITI Aayog
Apica SharmaConsultant-I, NITI Aayog
Abhilasha MandaConsultant-I, NITI Aayog
Salome Sara PhilipsYoung Professional, NITI Aayog
Riya JindalYoung Professional, NITI Aayog
Kavya RaoYoung Professional, NITI Aayog
Nikita GondolayYoung Professional, NITI Aayog
Kruthi RajYoung Professional, NITI Aayog

Trade Watch- Quarterly (April - June [Q1] FY26)