NITI Aayog Releases 8th Edition of Trade Watch Quarterly (Q4 FY 2025–26): Key Highlights on India's Trade Performance and Pharmaceutical Sector

NITI Aayog Releases 8th Edition of Trade Watch Quarterly (Q4 FY 2025–26)

The NITI Aayog has published the 8th edition of the Trade Watch Quarterly for the fourth quarter (January–March 2026) of FY 2025–26. The report presents an in-depth analysis of India's merchandise and services trade while highlighting emerging opportunities and policy challenges in the country's pharmaceutical industry.

The latest edition emphasizes India's resilient trade performance despite global economic uncertainties and identifies the pharmaceutical and Active Pharmaceutical Ingredients (API) sector as a major driver of future export growth.

What is Trade Watch Quarterly?

Trade Watch Quarterly is NITI Aayog's flagship analytical publication that tracks India's domestic and international trade performance using comprehensive data and economic indicators. The report serves as a policy resource by examining recent trade trends, identifying emerging challenges, and recommending measures to improve India's global competitiveness.

Edition Details

• Publication: Trade Watch Quarterly
• Edition: 8th Edition
• Quarter Covered: January–March 2026 (Q4 FY 2025–26)
• Published By: NITI Aayog
• Primary Objective: Assess India's merchandise and services trade while providing policy recommendations.

Theme of the 8th Edition

The fourth-quarter edition focuses on: "India's Pharmaceutical and Active Pharmaceutical Ingredients (API) Trade".

The report evaluates:

• Export potential of India's pharmaceutical sector
• Global competitiveness
• Supply chain resilience
• API import dependence
• Future growth opportunities
• Policy interventions required for sustained expansion

Key Highlights of India's Trade Performance

India's Total Trade Continues to Grow

India's overall merchandise and services trade maintained positive momentum during FY 2025–26. Major Statistics

• Total trade reached US$1.84 trillion
• Overall trade recorded 5.4% year-on-year growth
• Exports increased by 4.2%
• Imports registered 6.5% growth

Although merchandise exports witnessed a temporary slowdown during the fourth quarter, the overall trade outlook remained stable due to strong performance in services exports.

Merchandise Trade Performance

During the fourth quarter of FY 2025–26:

• Merchandise exports declined by 2.8%
• Merchandise imports increased by 11.9%

The report notes that global demand fluctuations and external economic conditions influenced merchandise trade during the quarter.

Services Exports Remain India's Biggest Strength

India's services sector continued to outperform merchandise exports.

Key Achievements

• Services exports grew by 9%
• Services imports increased by only 4.1%
• India remained the 8th largest exporter of services globally in 2025.

Between 2015 and 2025, India's services exports recorded a Compound Annual Growth Rate (CAGR) of 10.3%, significantly higher than the global average growth rate of 6.6%.

India's share in global services exports also increased to 4.3%, demonstrating the country's growing importance in international trade.

Expansion of Business Process Outsourcing (BPO)

The report highlights the continued success of India's software and outsourcing industry. Important findings include:

• Business Process Outsourcing (BPO) and support services contributed 63.5% of India's software services exports.
• Europe's share in India's services exports increased to 33%, indicating improved geographical diversification and reduced dependence on traditional markets.

Global Pharmaceutical Market Offers Huge Opportunity

The report identifies pharmaceuticals as one of India's most promising export sectors.

Global Market Size (2025)

• Global pharmaceutical and API market: US$1.3 trillion
• Pharmaceutical formulations: US$961.8 billion (75%)
• Active Pharmaceutical Ingredients (APIs): US$261.2 billion

This expanding global market presents significant export opportunities for Indian pharmaceutical manufacturers.

India's Pharmaceutical Export Performance

India exported pharmaceutical products and APIs worth approximately US$35.8 billion. However, despite being a major producer of affordable medicines, India's share in global pharmaceutical exports remains only 2.8%.

According to the report, this indicates considerable scope for expanding India's presence in international pharmaceutical markets through improved competitiveness, innovation, and supply chain strengthening.

Strengths of India's Pharmaceutical Industry

India has established itself as one of the world's leading pharmaceutical manufacturing hubs. Major strengths include:

• Contributes more than 1.7% to India's GDP.
• Accounts for around 7.2% of manufacturing Gross Value Added (GVA).
• Supports nearly 27 lakh livelihoods across manufacturing, research, logistics, and healthcare.
• India is one of the world's largest producers of: o Generic medicines o Vaccines o Essential medicines

The country's strongest export category remains retail medicaments and generic drugs (HS Code 3004), which generated exports worth US$22.6 billion and accounted for nearly 4% of global demand.

Why is this Report Important?

The Trade Watch Quarterly serves as an important policy document because it:

• Monitors India's external trade performance.
• Identifies emerging export opportunities.
• Assesses sector-specific challenges.
• Supports evidence-based policymaking.
• Guides strategies to improve India's global trade competitiveness.

For the pharmaceutical industry, the report underscores the need to reduce import dependence on APIs, strengthen domestic manufacturing, diversify export markets, and encourage innovation to achieve long-term growth.

Importance for Competitive Exams

This report is highly relevant for:

• UPSC Civil Services Examination
• State PCS Examinations
• SSC CGL & CHSL
• RBI Grade B
• NABARD
• Banking Exams
• CUET PG
• UGC NET (Commerce & Economics)

Questions may be asked on:

• NITI Aayog reports
• India's foreign trade
• Merchandise vs Services Trade
• Pharmaceutical Industry
• API (Active Pharmaceutical Ingredients)
• Generic Medicines
• India's export performance
• Current Affairs
• Economy

Quick Revision Points

Conclusion

The 8th edition of NITI Aayog's Trade Watch Quarterly reflects India's steady progress in international trade despite global economic challenges. While services exports continue to strengthen India's global position, the report identifies the pharmaceutical and API sector as a strategic industry with immense growth potential. By improving domestic manufacturing capabilities, reducing supply chain vulnerabilities, and expanding export markets, India can further enhance its competitiveness and emerge as a leading global pharmaceutical hub.