Why India Now: The Export Story

India’s external trade position could strengthen meaningfully over the next 12–18 months, supported by improving export competitiveness. India’s REER (Real Effective Exchange Rate) has fallen below China’s for the first time since April 2023, a sign that Indian goods are becoming genuinely cheaper rather than just nominally so, while the rupee itself has depreciated by around 8–18% against major currencies over the past year, further enhancing the competitiveness of Indian exports. Proposed trade agreements with the US, EU and UK could provide an additional impetus to exports across sectors such as auto components, engineering goods, EMS, textiles and chemicals. Together, these factors could help keep the current account deficit below 1.5% of GDP, while marking a meaningful improvement in India’s balance-of-payments outlook and strengthening the external sector as a potential support to the broader growth cycle.