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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM68064
Volume:
10 |
10 |
Oct 2026
Pages:
1-10
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Business School
KL University
Business School
KL University
This paper examines how foreign trade has influenced India's economic growth in the post-2022 period, using official data for FY2022-23 to FY2025-26 and provisional figures for the first months of FY2026-27. It develops a conceptual framework in which foreign trade, comprising merchandise exports, services exports, imports of capital goods and intermediates, and trade policy, affects growth through five transmission channels: technology transfer, capital formation through imported inputs, scale and competition effects, foreign-exchange relief, and integration into global value chains. The framework treats infrastructure, human capital, institutions and macroeconomic stability as conditioning factors, and global demand, tariff policy, geopolitical shocks and the trade deficit as external risks. The evidence shows that total exports of goods and services rose from about US$776 billion in FY2022-23 to US$860 billion in FY2025-26, while real GDP growth stayed high, at 7.1 percent in FY2024-25 and 7.7 percent in FY2025-26. Services exports carried the expansion: their share in total exports increased from about 42 percent to about 49 percent, and the services surplus of US$214 billion offset roughly two-thirds of a merchandise deficit of US$333 billion in FY2025-26. Merchandise exports, by contrast, were almost flat at about US$440 billion, and the overall trade deficit widened to US$119 billion. The paper concludes that trade has supported growth mainly through services and imported inputs, that the benefits are conditional on domestic capability, and that tariff shocks, import dependence and a stagnant goods-export base are the main constraints. Policy implications are discussed.
KEYWORDS
This paper developed a conceptual framework in which foreign trade affects India's growth through technology transfer, capital formation, scale and competition, foreign-exchange relief and value-chain integration, subject to domestic conditioning factors and external risks. Applied to the post-2022 period, the framework fits the evidence. Trade supported growth chiefly through services exports, which financed a large merchandise deficit, and through imported inputs that supported investment. Goods exports, however, stagnated, the overall trade deficit widened, and external shocks, notably in United States tariff policy and in West Asia, exposed the limits of the model. India's growth will increasingly depend on whether new trade agreements can revive goods exports, whether domestic manufacturing can capture more of the value in global supply chains, and whether import dependence in energy, gold and electronics can be reduced. Further research should apply the framework to quarterly and monthly data as longer post-2022 series become available, and use sector and state-level analysis to test the channels formally.
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Publication Date
10/17/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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The authors declare no conflict of interest related to this research work.
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