Services exports offset 64% trade deficit in FY26: Finance Ministry

India’s services sector has emerged as a key pillar of external sector resilience, cushioning the impact of a widening merchandise trade deficit, according to the April Monthly Economic Review released by the Ministry of Finance.The report highlighted that robust growth in services exports continues to provide momentum to the country’s overall export performance, supported by sustained global demand for digitally delivered and professional services.
In FY26, India’s services exports grew by 7.9 per cent year-on-year, crossing the $400 billion mark for the first time to reach $418.3 billion. This milestone reflects not just scale but also a structural shift in India’s export composition.The share of services in total exports rose to 48.6 per cent in FY26, up from 47 per cent in the previous fiscal, indicating a gradual pivot away from merchandise-led trade. The review noted that “services exports continue to provide thrust to the country’s total exports.”
The strong performance has also played a stabilising macroeconomic role. The Finance Ministry said the sector generated a net services surplus of $213.9 billion, which has significantly offset pressures arising from merchandise trade imbalances.Notably, the report emphasised that the services surplus accounted for 64.2 per cent of the merchandise trade deficit in FY26, underlining its importance in maintaining external balance amid global uncertainties.
Despite this buffer, India’s overall trade deficit widened during the fiscal year. The review pointed out that the total trade deficit stood at $119.3 billion in FY26, compared with $94.7 billion in FY25, reflecting higher import demand and global headwinds.The analysis, also highlighted by Zee Business, comes at a time when global trade remains volatile due to geopolitical tensions and supply chain disruptions. While merchandise exports have remained relatively subdued, the services sector—driven by IT, business, and financial services—continues to demonstrate resilience and competitiveness.The report suggests that India’s expanding services export base is not only supporting export growth but also acting as a critical shock absorber, helping mitigate external vulnerabilities and sustain macroeconomic stability.

(Business Correspondent)