India's Export Surge Faces Geopolitical and Market Challenges

India's merchandise trade sees a slight recovery, with exports edging up 0.5% in September. However, challenges like container shortages and rising tariffs pose ongoing risks. Strong services trade and remittance inflows offer some stability amid geopolitical tensions and fluctuating oil prices.

India's merchandise sector experienced a cautious upswing in September as exports rose by 0.5% year-on-year to USD 34.6 billion, following back-to-back monthly declines. The latest Crisil report highlights persistent threats from container shortages and geopolitical tensions, notably the US-China trade dynamics.

Despite the improved figures, the widening trade deficit remains a critical concern. Increased US tariffs on Chinese imports could drive more Chinese goods into Asian markets, India included, complicating export strategies. Nevertheless, robust service trades and remittance flows are likely to maintain equilibrium in India's current account.

Key export sectors such as drugs, engineering goods, and garments showed promising growth, counterbalanced by a steep 26.8% drop in petroleum product exports, a significant export category. In contrast, non-oil export growth hit 6.8% in September. This dichotomy reflects broader challenges and opportunities in India's trade landscape.

(With inputs from agencies.)