At the peak of the West Asia disruption, India’s goods exports bucked expectations to record their best-ever June, with outbound shipments jumping to a record $44.24 billion. Despite higher freight rates arising from logistical disruptions and a surge in input prices, exports during the April to June quarter of the ongoing financial year, which coincided with the closure of the Strait of Hormuz, also registered 15% growth.Healthy export figures amid two ongoing wars also supported the 7.8% year-on-year growth in gross domestic product (GDP) during the April-June quarter. Highlighting the “brisk” growth in India’s non-oil and non-gold exports, which form the core of its exports, Chief Economic Adviser (CEA) V Anantha Nageswaran said exports are benefiting from free trade agreements (FTAs), export diversification and “possibly rising competitiveness”.Trade data released by the Commerce and Industry Ministry also showed that goods exports grew 15% in the April-June quarter of 2026-27, to $129.32 billion from $111.57 billion a year earlier. Non-petroleum, non-gems and jewellery exports grew by 12% to $99.04 billion during the quarter.High-end exports vs low-margin sectorsHowever, sectoral data show that the export growth picture masks an uneven picture. While high-end products such as engineering goods, electronics and pharmaceuticals grew by 18.1%, 22.6% and 6.8% respectively during the April-June quarter, several labour-intensive sectors registered a sharp decline.Textile exports slipped 12.4%, while leather products declined by 4.7%. Exports of low-margin products such as fruits and vegetables, ceramics and glassware, and jute products fell 10.3%, 25% and 13.4% respectively. Tea exports came under particular pressure, falling 17.5%.Of 31 export sectors, goods exports registered a decline in 11 sectors.Economists and industry executives said the West Asia crisis is disrupting trade at various levels, with steep logistics costs showing up more clearly in exporters’ profit margins. While high-end products have managed to absorb the shock, low-margin exporters have largely prioritised market share.Story continues below this adAlso Read | GDP debate: Centre rebuffs criticism of methods, says 7.8% growth correctDevendra Kumar Pant, Chief Economist, India Ratings, said that non-oil, non-gold exports have done well in the quarter. “Input prices have gone up. Now the problem for exporters would be the margins. On higher margins, exporters would not be competitive, or the importers won’t give the price which will protect exporters’ margins. So they will be forced to lower margins. Export figures will not show the dip in profitability,” Pant said.Chairman of the Indian Tea Exporters Association (ITEA) Anshuman Kanoria said that the outlook for tea exports this year is very poor and the West Asia situation could lead to a 25% decline in exports this year. “There has been a 10-fold surge in freight rates in key markets including Iran, Iraq, the US and the EU. Payment has also become a problem in the region,” Kanoria said.Rupee depreciation helps exporters, but raises import costsAn analysis of core export data (non-oil and non-gems and jewellery) showed that outbound shipments in the April-June quarter grew 12% from a year earlier. By comparison, average growth in core exports over the previous two financial years was 6.5%.Experts said a sharp depreciation in the rupee has aided competitiveness. The Indian rupee has depreciated nearly 15% over the past 12 months, amid capital flight against the backdrop of US tariffs and the West Asia crisis. While this has helped export-oriented sectors such as IT and pharmaceuticals, import-dependent sectors such as oil and gas, and companies that depend heavily on imported raw materials, have been hurt by the weaker rupee.Story continues below this ad“As of now, the rupee at 94 is providing good support to exports. Globally, the rupee is the worst-performing currency. Over a period of time, the rupee has depreciated by around 7%, and the Chinese yuan has appreciated by 8%. This is giving Indian exporters a 15% advantage over China. Besides, in the sunrise sector and knowledge- and technology-driven sector of exports, exports are doing well. But in the labour-intensive sector, it’s a mixed picture,” Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO), said.Goods imports as well as non-oil, non-gems and jewellery imports also surged during the April-June quarter. Overall imports rose 19.89% to $216.18 billion, from $180.31 billion a year earlier, while non-oil, non-gems and jewellery imports increased 18% to $140.22 billion.Consequently, India’s current account deficit (CAD) widened to $4.2 billion, or 0.5% of GDP, in the first quarter of 2026-27, from $3.4 billion, or 0.4% of GDP in the corresponding quarter a year ago. The widening was driven primarily by a sharper merchandise trade deficit, with the goods trade gap increasing to $86.1 billion from $68.9 billion a year earlier.Swift diversification and higher export absorption by FTA countries also helped cushion the impact of the West Asia crisis. When Indian exports came under pressure, particularly through the UAE route, exporters began diversifying towards another transhipment hub, Singapore, among other regions.Story continues below this adTrade data showed that Indian exports to Singapore nearly doubled during the April-June quarter from a year earlier. While exports to the UAE dipped nearly 11% to $7.9 billion from $9 billion, exports to Singapore jumped 101% to $6.5 billion from $3.2 billion. Notably, the UAE is India’s second-largest export market after the US.Also in Explained | Why India’s IPO markets are heating up after slow first half of 2026India’s exports to FTA countries, particularly Australia and the UK, also showed significant growth. Exports to the UK rose 11.1% during the quarter, while shipments to Australia jumped 25.1%. Exports to China also increased, rising 25% to $5.59 billion. The rise in shipments to China, however, was dominated by input items rather than finished or intermediary goods.Future risks and vulnerabilitiesThe CEA on Monday also said that the risk to export growth could come from volatile crude oil prices due to the “lurking risk” of supply disruption, which has prevented Brent crude from coming down materially and sustainably below $80 a barrel. Diesel per gallon is heading towards $6 in the US, a level last seen in 2022, and natural gas prices in Europe compared to last year are significantly higher, Nageswaran said.“We learnt that some minor attacks are being undertaken by the United States against rocket launches of Iran to prevent laying of mines in the Strait of Hormuz. Oil prices may have jumped a little bit on the news, but by and large the oil price impact of the conflict has remained more muted than what one would have expected and thankfully so from the Indian perspective. That’s partly because of lower demand by China and also strategic petroleum reserves released by the US and other countries.Story continues below this adHowever, the disruptions are expected to last longer than expected. So, there is always a lurking risk of crude oil supply disruption which is there, which probably will prevent oil prices from coming down materially and sustainably below $80 per barrel in terms of Brent crude. However, more than the rise of crude oil, what we should be watching are the prices of petroleum products such as diesel and natural gas, which have basically made it more expensive, and that will have an implication for private consumption growth in parts of Europe and in the US,” Nageswaran said.