Composition of India's exports

Topic: India's International Trade and Tourism · NCERT: Class 12, Ch 8 "International Trade"

Meaning

The composition of India's exports is the mix of goods and services that India sells to other countries. It is shown as the share by value of each group, meaning the per cent of total export earnings that each group brings in. It matters because a change in this mix shows a change in the economy. When the mix moves from raw materials towards factory goods, electronics and services, the economy is moving from farming towards industry and services.

Explanation

How the mix changed over time

• Colonial trade: India mostly exported raw materials and farm goods. It imported finished factory goods.
• After independence, and faster after the 1991 liberalisation: manufactured and value-added goods took over.

• Value-added means raw material that has been processed into something worth more.

• Present day: high-technology goods (electronics) and services are growing fastest.

The main groups of merchandise exports (NCERT Table 8.2, share by value)

Merchandise exports are physical goods, such as diamonds, rice and machines.

Group	2015-16	2021-22	Trend
Manufactured goods	72.9%	67.8%	Largest share, but falling
Crude and petroleum products	11.9%	16.4%	Rising
Agriculture and allied products	12.6%	11.9%	Slight fall
Ores and minerals	1.6%	2.0%	Small, stable

• Manufactured goods are about two-thirds of exports. This makes India's export basket mainly industrial.
• Engineering goods are machines, vehicles and auto parts, iron and steel products, ships, electrical equipment and similar metal-based goods. They are the largest single sector. They were worth US$ 116.67 billion in 2024-25, up 6.74% from US$ 109.3 billion in 2023-24. That is about 27% of total merchandise exports of US$ 437.42 billion [2].
• Gems and jewellery: rough diamonds are imported, then cut and polished in India, then re-exported.

• Chemicals, drugs and pharmaceuticals: in 2024-25, engineering goods, electronic goods, and drugs and pharmaceuticals were the top three sectors behind export growth [3].

• Crude and petroleum products: India imports most of its crude oil. It refines the oil and exports refined petroleum products such as diesel, petrol and aviation fuel.

• The share rose to 16.4% in 2021-22 mainly because world oil prices were high. It does not mean India produces more crude oil of its own.
• These exports grew 6.95% in 2024-25 [2].

• In 2025-26, merchandise exports were US$ 441.78 billion and non-petroleum exports were US$ 387.88 billion. That puts petroleum products at about US$ 54 billion, roughly 12% of merchandise exports. The share is lower than in 2021-22 because oil prices fell [4].

• Agriculture and allied products:

• Traditional items fell: cashew, and to some extent tea, coffee and spices, lost share because world competition grew tougher.
• New items rose: floriculture (growing flowers for sale), fresh fruits and vegetables, marine products (fish and shrimp) and sugar.

• Rice: India is the world's largest rice exporter. Rice exports were worth US$ 12.95 billion in 2024-25 [7].

• Ores and minerals: only about 2% of exports (2021-22).

• Reason: India now uses more of its own iron ore in its steel and metal plants.
• It exports finished steel, which counts as a manufactured good, instead of raw ore.

The fast-growing new items: electronics and services

• Electronics is the fastest-growing item.
• The PLI scheme (Production Linked Incentive) gives companies cash rewards linked to how much extra they make in India.
• The PLI scheme for Large Scale Electronics Manufacturing has drawn about ₹96,000 crore of investment into mobile phone making [6].
• Mobile phone exports grew 127 times, from ₹1,500 crore (2014-15) to ₹2,00,000 crore (2024-25) [6].

• Electronic goods exports grew 32.47% in 2024-25 [2].

• Services exports are work sold abroad without a physical product, such as software, IT-enabled services, business consulting and tourism.

• Class 10 NCERT calls India a "software giant". IT earns a lot of foreign exchange (money in foreign currencies such as the US dollar, which India needs to pay for imports).

Year	Merchandise exports	Services exports	Total exports
2024-25	about US$ 437.7 billion	US$ 387.5 billion (+13.6%)	US$ 825.25 billion (record) [3]
2025-26	US$ 441.78 billion (+0.93%)	US$ 418.31 billion (+7.94%)	US$ 860.09 billion (+4.22%) [4]

• In 2025-26, services made up about 49% of all exports and grew more than eight times as fast as goods [4].
• RBI data put total exports for FY 2025-26 at a record US$ 863.1 billion [5].

What the mix depends on

• Imported raw materials: gems and petroleum exports depend on imported rough diamonds and crude oil. India adds value with skilled labour and refining, not with its own mines or oil wells.
• World prices: the petroleum share goes up and down with oil prices.
• Competition: rival countries can push out traditional items. Cashew is the clearest example.
• Skilled people: services exports depend on trained workers in large cities.

Where it occurs

• Gujarat:
• Surat (on the Tapi river, near the Gulf of Khambhat) cuts and polishes diamonds.
• Jamnagar (on the Gulf of Kachchh, about 22°N) is the leading export refinery hub. It has some of the world's largest refining capacity.
• Ahmedabad and Vadodara make chemicals and pharmaceuticals.

• These goods ship out through Kandla (Deendayal), Mundra and Sikka ports.

• Mumbai and Pune belt (Maharashtra): engineering goods, pharmaceuticals and diamond trading. Mumbai is where diamonds are traded and re-exported. Goods ship through JNPA (Nhava Sheva).

• Chennai, Bengaluru and Coimbatore: automobiles, electronics, software, and garments from Tiruppur (Tamil Nadu).
• Electronics clusters: Noida (Uttar Pradesh), Sriperumbudur near Chennai (Tamil Nadu), and the Bengaluru–Hosur belt (Karnataka and Tamil Nadu).
• Hyderabad: bulk drugs and IT services.
• Marine products: coastal Kerala, Andhra Pradesh and Gujarat. Kollam (Kerala) processes cashew.
• Basmati rice: the Indo-Gangetic plains of Punjab, Haryana and western Uttar Pradesh [8].
• Why the west and south lead: factories close to a port pay less for freight and get goods out faster, so most export industries are in the western and southern coastal states.
• World rivals:
• China and the East Asian economies (South Korea, Taiwan, the ASEAN countries) compete in engineering goods.
• Vietnam competes in cashew.
• Vietnam and Bangladesh compete in garments.
• In Q2 2025 (April to June), India overtook China as the top smartphone exporter to the United States [6].

Don't confuse with

• Direction of trade: this is about which countries India sells to or buys from. Composition is about what India sells.
• Merchandise exports vs services exports: Table 8.2 shares (67.8% manufactured goods and so on) cover only goods. Services such as software are counted separately. They were US$ 418.31 billion in 2025-26 [4].
• Petroleum product exports vs crude oil production: India exports refined products made from imported crude oil. A higher petroleum share does not mean India has more oil of its own.
• Re-export through value addition vs export of own resources: diamonds are imported rough, cut in Surat and re-exported through Mumbai. India adds skill to these goods; it does not mine them. Ores and minerals, which India does mine, are only about 2% of exports.

Prelims Hooks

• Order by share in 2021-22 (highest to lowest): manufactured goods (67.8%) > crude and petroleum products (16.4%) > agriculture and allied (11.9%) > ores and minerals (2.0%).
• Trap: from 2015-16 to 2021-22, the petroleum share rose (11.9% → 16.4%) while the manufactured goods share fell (72.9% → 67.8%).
• Largest single sector of merchandise exports: engineering goods, US$ 116.67 billion in 2024-25 [2].
• Place–function pairs: Surat (Gujarat, Tapi river) – diamond cutting and polishing; Mumbai – diamond trading; Jamnagar (Gulf of Kachchh) – refined petroleum exports.
• Farm exports: cashew is the traditional export that declined. Floriculture, fresh fruits, marine products and sugar are rising. India is the world's largest rice exporter and the largest Basmati exporter [8].
• Mobile phone exports rose about 127 times between 2014-15 and 2024-25, mainly because of the PLI scheme [6].

Mains Points

• From primary goods to value-added goods (GS-I/GS-III):
• Colonial India sold raw materials and bought finished goods.
• After 1991, manufactured goods (about two-thirds of merchandise exports) and services took the lead.

• Today electronics under PLI is the fastest-growing item. This shows the economy moving from farming towards industry and services.

• Weak points in the export mix:

• Import dependence: gems and petroleum exports rely on imported rough diamonds and crude oil. They leave a narrow margin and suffer when world prices change.
• Competition: engineering goods and garments face strong rivals in China, Vietnam and Bangladesh.

• Farm exports depend on the monsoon and on export bans. Cashew shows how a traditional item can lose its market.

• Uneven spread and policy responses:

• Exports are concentrated in Gujarat, Maharashtra, Tamil Nadu and Karnataka, near ports and industrial regions. The interior and eastern states lag behind.
• Responses: dedicated freight corridors, Sagarmala port-led development and the "District as Export Hub" approach.
• Services help cover the gap: services exports (US$ 418.31 billion in 2025-26) grew faster than goods [4]. They help pay for the merchandise trade deficit (when imports cost more than exports earn).

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