Niti Aayog VC pitches for export diversification to beat external headwinds

Niti Aayog's vice-chairman, Ashok Lahiri, advocated for further diversification of India's exports to mitigate the impact of external challenges and maintain the growth momentum in outbound shipments. In his presentation of the government think-tank's June-quarter Trade Watch report, Lahiri emphasized the importance of not succumbing to export cynicism.

The report data indicated that India's diversification efforts were beginning to yield results, with two African nations—Tanzania and South Africa—emerging among the top ten destinations for Indian products. This marked a shift from Hong Kong and Saudi Arabia, which had previously held these positions due to the ongoing conflict in West Asia. Lahiri also acknowledged that businesses should bear a portion of the Unified Payments Interface (UPI) transaction costs, advocating for the "user-pay" principle.

Energy source diversification emerged as another crucial area of focus, particularly in light of the ongoing conflict in West Asia, which has heightened India's dependence on critical mineral imports. Copper imports, for instance, more than tripled to $11.8 billion in 2025, while India remains entirely reliant on nickel and cobalt imports. Lahiri emphasized the need for a shift in energy sources, drawing lessons from the geopolitical situation in West Asia.

The quarterly trade report demonstrated that India's overall goods exports had increased by 16% compared to the previous year, reaching $129.5 billion. However, imports grew by 19.8% to $216.1 billion, resulting in a significant $86.6 billion trade deficit. On a positive note, services exports continued to grow steadily, rising by 9.6% year-on-year to $106.7 billion, generating a net services trade surplus of $52.22 billion.

Export markets showed notable diversification, with the Association of Southeast Asian Nations (ASEAN) and East Africa experiencing the most significant growth—61.3% and 89.0%, respectively. This growth was driven by increased shipments of petroleum products, electrical machinery, engineering goods, and agricultural products. Imports from Latin America and West Africa also saw substantial increases—137.4% and 91.3%, respectively—primarily fueled by higher purchases of crude oil, minerals, and other primary commodities, indicating a broader diversification of India's import sources.

In terms of services exports, the digitally delivered segment reached $317 billion in 2025, marking a 15% year-on-year growth. This achievement propelled India from being the world's fifth-largest exporter to the fourth-largest exporter, surpassing Germany. Business services and computer services remained the primary drivers of India's digitally delivered services exports.

Despite India's relatively small share in the global metals and ores import market—only 1.8% in 2025—there is considerable potential for expansion. The market was valued at $2 trillion, with iron and steel and articles of iron and steel accounting for 50.9% of global metals demand. However, India's share in this market was just 2.5%. The report emphasized that India could capitalize on this opportunity, particularly in the iron and steel sector, where its current market penetration was minimal.