India’s export machine is still earning hard currency with impressive consistency. The problem is that software-led strength, by itself, can’t deliver the jobs, scale and resilience a large economy needs.
India exports 2026 are being stabilised by services
India exports 2026 are telling two stories at once. The flattering one is in the Commerce Ministry’s 16 March 2026 trade release: total exports in February 2026 were estimated at US$76.13 billion, with services exports at US$39.53 billion and merchandise exports at US$36.61 billion. In one ordinary month, the invisible economy out-earned the visible one. That no longer looks exceptional. It looks structural. Every serious conversation about India’s external sector now begins with software, business services and GCC-linked capability, not with containers, factory gates or port throughput.
The second story is less comfortable. In April-February 2025-26, merchandise exports stood at US$402.93 billion while services exports were already at US$387.93 billion, according to the same release. Services have nearly matched goods across eleven months of the year. The services surplus for April-February was US$200.96 billion, against a merchandise trade deficit of US$310.60 billion. In FY25, the Economic Survey 2025-26 recorded a services trade surplus of US$188.8 billion, enough to cover roughly two-thirds of the merchandise deficit. That is genuine macroeconomic strength. It supports the rupee, softens external stress and buys policy room. It also reveals how much stabilisation India is asking one part of the export machine to perform.
Why services strength is not export depth
The Economic Survey makes the central point plainly: services exports, by themselves, rarely generate the same scale, employment linkages or counter-cyclical support as broad-based manufacturing export growth. That matters because India is not a small offshore platform trying to maximise foreign exchange with a narrow labour base. It is a large labour market with regional inequality, uneven industrialisation and a continuing jobs challenge. Software exports create high-quality income, but they do so with a narrower skills funnel, sharper urban concentration and weaker supplier spillovers than a deep manufacturing base does. A code-led export boom can enrich top talent and strengthen external accounts. It cannot, on its own, build a broad wage ladder from industrial clusters across states.
That is why the right question is not whether services exports India can be proud of are good enough. They are excellent. The harder question is whether they are carrying more weight than they should have to. When one segment repeatedly acts as the shock absorber, policy begins mistaking resilience for balance. Software can cushion the current account. It cannot substitute for scale in machinery, electronics, chemicals, processed foods and other tradable goods that pull in workers, suppliers, logistics firms and regional investment. Services strength is an asset. It becomes a structural weakness when it excuses under-development elsewhere.
India exports 2026 need more goods depth
None of this means the merchandise story is broken. It is better described as unfinished. The March 2026 trade release shows non-petroleum exports at US$354.12 billion in April-February 2025-26, up 5.03 per cent year on year, while non-petroleum, non-gems-and-jewellery exports reached US$327.96 billion. In February alone, engineering goods exports rose to US$10.36 billion and electronic goods exports to US$4.18 billion. Those are not marginal sectors. They sit close to the core of any serious export transition because they demand vendor depth, quality discipline, testing capacity and the ability to serve demanding overseas buyers at scale.
The Economic Survey adds an important qualification. It notes that non-petroleum, non-gems-and-jewellery exports accounted for 78.7 per cent of aggregate merchandise exports in FY25, and that several PLI-linked sectors have posted strong export growth since FY21. Across PLI sectors, export growth averaged 10.6 per cent annually during FY21-FY25. Electronics exports grew at an average annual rate of 38.8 per cent and IT hardware at 77.2 per cent. Yet imports in many of these sectors also rose. That should not be read lazily as proof of failure. It often shows India entering global value chains through imported intermediates before it captures more domestic value addition. The problem is not that imports are rising. The problem is that the transition from assembly to ecosystem is still uneven and, in some sectors, still shallow.
Geopolitics is changing the export test
Geopolitics makes that unevenness more costly. The Economic Survey’s external sector chapter frames the world through tariff uncertainty, protectionism and strategic fragmentation. India has made progress: between calendar years 2005 and 2024, its share of global merchandise exports rose from 1 per cent to 1.8 per cent, while its share of global commercial services exports rose from 2 per cent to 4.3 per cent. Yet the gap itself is revealing. India is far more formidable in global services than in goods, and the difference matters in a world where resilience increasingly depends on who controls production networks, component ecosystems, standards compliance and delivery reliability.
Even services carry concentration risk. The Economic Survey’s summary of the RBI software exports survey shows the US still taking the largest share of India’s software exports in FY25, though its share eased to 52.9 per cent from 54.1 per cent a year earlier, while Europe’s share rose to 32.8 per cent. Diversification is happening, but not fast enough to remove dependency. For the middle class, this matters because export composition shapes the job ladder. A services-heavy model rewards already skilled urban workers faster than it broadens employment across income tiers. A stronger goods engine would do more for factory jobs, logistics, ancillary MSMEs and the wage bargaining power of households outside the top metro corridor. For the corporate sector, the implication is operational: customs efficiency, rules of origin, supplier localisation, trade finance and currency hedging are now strategy, not back-office procedure. For tax professionals, compliance friction rises as GST refunds, export documentation, customs valuation, transfer pricing and treaty-sensitive structuring become central to the export self-assessment architecture.
The policy mistake to avoid
The policy answer is not nostalgia for smokestacks and it is not complacency about software. India does not need to abandon its comparative advantage in technology and business services; it needs to stop treating that advantage as sufficient. Lower logistics costs, faster port evacuation, steadier tariff policy, deeper component ecosystems, reliable power, quicker rebate and refund mechanisms, and export finance aligned to long working-capital cycles matter more than slogan-heavy industrial policy. The November 2025 RBI amendment extending the realisation and repatriation period for export proceeds from nine months to fifteen months is helpful liquidity relief. It is not competitiveness. Relief eases strain. Productivity changes the export map.
That is the deeper conclusion. India’s export position is stronger than many critics admit and more unbalanced than many officials like to concede. Services exports India has built are world-class and, by April-February 2025-26, were already above the full-year FY25 level cited in the Economic Survey. That is a strategic asset. But software can’t carry everything forever. Not the jobs challenge. Not the manufacturing learning curve. Not the politics of regional development. India will look export-secure only when code and containers stop acting like substitutes and start behaving like complements.
Sources & Data Points
1. Ministry of Commerce and Industry, Monthly Press Release on India’s Foreign Trade, dated 16 March 2026
https://www.commerce.gov.in/wp-content/uploads/2026/03/PIB-Release.pdf
2. Ministry of Commerce and Industry, Latest Trade Figures page
https://www.commerce.gov.in/trade-statistics/latest-trade-figures/
3. Economic Survey 2025-26, Chapter 4: External Sector – Playing the Long Game
https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap04.pdf
4. Reserve Bank of India, Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2025
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12923&Mode=0
5. Reserve Bank of India, Database on Indian Economy (DBIE)
