India logs $31 bn trade gap with FTA partners in Q2 FY26:NITI Aayog

India recorded a trade deficit of $31 billion with its Free Trade Agreement (FTA) partner countries during the second quarter of FY26, according to a report released by NITI Aayog on Friday.As per the sixth edition of its Trade Watch Quarterly, India’s exports to FTA partners stood at $38 billion in the July–September 2025 quarter, while imports rose to $69.8 billion, resulting in a $31 billion trade gap. Key FTA partners include the UAE, Singapore, Australia, Japan and South Korea.
Exports to the Association of Southeast Asian Nations (ASEAN) declined 16.8% year-on-year during the quarter. Shipments fell sharply to Australia (18.7%), Malaysia (32.1%), Singapore (36.7%) and Mauritius (51.8%).However, exports posted gains to the UAE (10.5%), South Korea (14.7%), Thailand (16.1%), Sri Lanka (17.6%) and Japan (7.5%), partially offsetting the overall decline.On the import front, purchases from FTA partners increased to $69.8 billion from $66.8 billion in the corresponding period last year. The rise was driven by higher inflows from ASEAN (4.4%), SAFTA (82.2%), Singapore (6.7%), Malaysia (16.2%), Japan (13%), and Thailand (13.3%). Imports declined from Australia (27.5%) and South Korea (2.6%).The report noted that India’s FTAs remain “resilient,” highlighting strong export performance in select markets and rising imports as a sign of deeper trade integration.The government led by Narendra Modi has concluded five trade deals in less than a year, including agreements with the UK, the EU, Oman, New Zealand and the United States, signalling an accelerated push toward trade diversification.Overall, India’s total merchandise and services trade rose 5.1% year-on-year during April–September 2025 to $895.1 billion. Exports grew at a faster pace than imports, supported by robust expansion in services and select merchandise segments.
Focus on Electronics Trade
The latest edition of the report carries a thematic focus on India’s electronics trade, analysing global demand trends and India’s participation in global electronics value chains across mobile phones, consumer electronics, industrial electronics and components.“Electronics, as the organising core of modern manufacturing value chains, plays a key role in determining trade balances and technological sovereignty,” said NITI Aayog Vice-Chairman Suman Bery.He noted that while India has achieved scale in final assembly, long-term competitiveness will hinge on addressing structural cost disadvantages, strengthening domestic component ecosystems and leveraging anchor investments to embed Indian firms more deeply within global production networks.The global electronics market is estimated at $4.6 trillion, with India accounting for around 1% in 2024. India’s electronics exports are heavily concentrated in mobile phones, which constitute 52.5% of the basket. On the import side, integrated circuits account for 23.7%, followed by mobile phones (17.5%) and data-processing machines (10.6%), underlining continued dependence on high-value components.ac