India’s export basket is undergoing a structural shift, with machinery and electronics emerging as key growth areas alongside traditional labour-intensive sectors such as textiles, leather, handicrafts and low-end engineering goods.
Ajay Srivastava, Former Additional Director General of Foreign Trade at the Department of Commerce, said India has witnessed a distinct rise in machinery exports over the past five to six years, covering products such as pumps, compressors and other types of machinery. Electronics exports have also been growing steadily, driven largely by the rapid expansion of smartphone exports to markets across the world.
“Our traditional sectors have been labour-intensive tools like textiles, low-end engineering goods, leather goods and handicrafts. But now, for the past five to six years, we are seeing a distinct rise in machinery exports,” Srivastava said.
He added that while machinery exports have a high valuation, electronics are also gaining momentum, with increasing value addition taking place in India.
According to Srivastava, India has deliberately focused on machinery and electronics because of their significant share in global trade. The country had previously lagged in these segments but has sought to close the gap through targeted policy support, including the Production Linked Incentive (PLI) schemes, efforts to strengthen domestic manufacturing and measures to attract multinational companies to establish operations in India.
He said these measures are beginning to deliver results for both the machinery and electronics sectors.
India eyes opportunity in AI infrastructure
Srivastava also pointed to the growing global investment in artificial intelligence infrastructure as an emerging opportunity for India.
He said the government has been encouraging the establishment of data centres in India and has introduced incentives aimed at attracting large global technology companies. The government has also introduced schemes supporting semiconductor fabrication, including capital subsidies, while India already has a large ecosystem of chip designers serving global companies.
According to Srivastava, these initiatives could begin producing more tangible results for India within the next one to two years.
The expansion of data centres, semiconductor manufacturing and chip design could potentially allow India to participate more deeply in the global AI infrastructure build-out, alongside established technology and manufacturing economies.
India sees limited exposure to potential US sanctions on Iran
On the possibility of the US imposing penalties on countries that continue to support Iran economically, Srivastava said India’s current trade relationship with Iran has weakened considerably and therefore the impact on India would be limited.
He noted that India was importing around $12 billion worth of crude oil from Iran about five years ago, but no longer imports crude from the country. Current trade is largely limited to goods such as agricultural products, including apples, dates, almonds and other commodities, with overall imports remaining below $400 million, according to Srivastava.
As a result, he does not expect US sanctions targeting Iran to have a significant impact on India.
US tariff policy remains a moving target
Srivastava, however, said the broader trade relationship between India and the US remains difficult to predict as Washington continues to introduce new demands and potential tariff measures.
“I am not very sure what the US wants from India because every day they keep on throwing new demands,” he said.
He pointed to several areas of uncertainty, including the possibility of higher tariffs linked to India’s purchase of Russian oil, existing Section 301 tariff measures, proposed pharmaceutical tariffs and the potential outcome of further US trade investigations.
With new measures and demands continuing to emerge, Srivastava described the US tariff environment as a “moving target”.
For Indian exporters, this means the trade landscape is likely to remain fluid, requiring businesses and policymakers to respond to developments as they arise. At the same time, the shift towards higher-value exports in machinery and electronics could help India strengthen its position in global trade and reduce its dependence on traditional labour-intensive export segments.
source: CNBC
