# How competitive is India's trade with the world?

> Despite $445 billion in merchandise exports, India's share of world exports is just 1.7%, lower than in 1948. Tariffs remain high, and export complexity lags Asian peers.

**India punches below its weight in global trade**

India exported $445 billion in goods in 2025, but its share of world exports is just 1.7%, less than half the 2.2% it held in 1948. Terms of trade have improved from 63.7 to 92.5 since 1980, yet remain below parity. Tariffs averaged 16.2% in 2024, versus 7.5% in China. India's revealed comparative advantage is concentrated in textiles, pharma, and iron & steel; high-tech exports form only 18.6% of manufactured exports. While connectivity and complexity are inching up, India's trade competitiveness is held back by high protection and limited global value chain integration.

India is now the world’s fifth-largest economy, and its goods exports have grown from under $2 billion at independence to over $445 billion in 2025. Yet its weight in global trade reflects moderate success, not dominance. The country’s share of world merchandise exports is 1.7%, down from 2.2% in 1948. Meanwhile, many Asian economies that started far behind India have surged ahead. This page examines the evidence behind India’s trade competitiveness: terms of trade, export shares, openness, tariffs, comparative advantage, participation in global value chains, and the sophistication of its export basket. The picture is mixed, impressive absolute growth, but relative underperformance compared to peers, and a structure that remains tilted toward low-complexity goods.

## What are India’s terms of trade and what do they signal?

The terms of trade index measures the price of India’s exports relative to its imports, with 2015 as the base year (100). A number below 100 means export prices buy fewer imports than they did in 2015. In 2025, India’s terms of trade stood at 92.5, a substantial rise from 63.7 in 1980. This improvement means that over four decades, India’s export prices have grown faster than import prices. For instance, higher global prices for refined petroleum and chemicals have helped. However, the index remains below parity, and since 2022 it has dipped slightly, suggesting recent pressure. A declining terms of trade reduces national purchasing power, each shipment of goods buys fewer foreign products. So while the long-term trend is positive, India is still getting less for its exports relative to what the world charges for its imports than it did in 2015.

## How does India’s export share compare with Asian peers?

India’s share of world merchandise exports fell from 2.2% in 1948 to a low of 0.5% in the early 1980s, then recovered to 1.7% by 2025. Compare this with China, which went from 0.9% to 14.4% over the same period, or South Korea, which rose from almost zero to 2.7%. Vietnam, a late starter with just 0.2% of world exports in 1948, now commands 1.8%, a whisker above India. Thailand, too, climbed from 0.4% to 1.3%. The divergence is stark: India’s share improved by only half a percentage point since the early 1990s, while China added nearly 13 points. These trajectories are not just about size; they reflect deliberate policy choices around trade openness, manufacturing, and integration into global supply chains that India did not replicate.

## How open is India’s economy relative to its neighbours?

Exports as a percentage of GDP measure how trade-driven an economy is. In 2024, India’s exports (goods and services) amounted to 21.2% of GDP, up from 7.1% in 1990 when liberalisation began. That is a marked increase, but it pales beside Vietnam’s 90.2%, up from 36% in 1990. South Korea’s exports are 44.4% of GDP, and even China, with its huge domestic market, records 20%. The world average is 29.1%. India’s openness is below the world norm and is dwarfed by the dragon economies that bet their growth model on exports. One visible reason is India’s larger reliance on its vast domestic market, but another is the persistent policy choice to protect rather than compete.

## How high are India’s tariffs compared to other economies?

One reason India trades less is its tariff wall. The simple average most-favoured-nation (MFN) applied tariff was 16.2% in 2024, down only slightly from 19.2% in 2005. By contrast, China’s average is 7.5%, Vietnam’s is 9.5%, and South Korea’s is 13.4%. The United States averages just 3.3%. India’s tariffs are among the highest in the world for a major economy. High tariffs protect domestic producers, but they also raise costs for consumers and make it harder for Indian firms to import competitively priced inputs for their own exports. This protectionist stance is a key reason India is not as deeply integrated into global manufacturing networks.

## Where does India have a revealed comparative advantage in exports?

Revealed comparative advantage (RCA) measures whether a country exports more of a product category than the world average. An RCA above 1 indicates specialisation. In 2024, India’s strongest advantages lay in textiles (RCA 3.14), clothing (1.65), iron and steel (1.47), pharmaceuticals (1.41), fuels (1.32), chemicals (1.27), and agriculture (1.22). These are traditional sectors and resource-based products. India has no comparative advantage in machinery and transport equipment (0.71), office and telecom equipment (0.57), or automotive products (0.53), exactly the categories where global demand is robust and value addition is high. The pattern persisted across decades; even textiles, while still a strength, has declined from an RCA of 5.63 in 1980.

## How much do India’s trade deals actually cut tariffs?

The MFN tariff overstates the duty actually paid because bilateral trade agreements grant preferences. The effectively applied tariff, which accounts for these deals, averaged 9.8% in 2023, compared to an MFN rate of 14.9% that same year. The gap, about 5 percentage points, reflects the impact of India’s preferential trade agreements. Still, the effectively applied rate is higher than most peers’ MFN rates. India’s trade deals provide only partial relief, and the basic structure remains highly protected.

## How complex is India’s export basket compared to regional leaders?

The Economic Complexity Index (ECI) captures the diversity and sophistication of a country’s exports. In 2024, India’s ECI stood at 0.71, up from 0.38 in 1995. This is an improvement, but it is far behind South Korea (1.6) and China (1.27). Thailand (0.81) is also ahead, while Vietnam (0.67) is slightly below. India’s complexity is rising, partly due to growth in pharmaceuticals and chemicals, but the gap with the leaders is large. Complexity matters because it correlates strongly with future growth: countries that export a wider set of sophisticated products tend to prosper.

## What is India’s global rank on economic complexity?

India’s economic complexity rank was 42 in 2024, up from 57 in 1995. A lower rank means more complex. The ranking places India in the top third of countries, but well behind the top tier. The improvement of 15 places over three decades reflects a gradual shift toward more varied and advanced exports, but it is not a leap. India’s rank is similar to countries like Brazil and Indonesia, not the advanced manufacturing powers.

## How much of India’s exports is actually produced at home?

Gross exports contain both domestic value added (DVA) and foreign value added (FVA), imported inputs that are processed and re-exported. In 2022, India’s DVA accounted for 74.3% of gross exports, down from 89.4% in 1995. Correspondingly, FVA rose from 10.6% to 25.7%. This means India is relying more on imported components to make its exports, a sign of deeper, though still moderate, integration into global supply chains. The flip side is that a quarter of what India exports is not genuinely made in India. This is not necessarily bad; it means India is specialising in certain stages of production, but the domestic content is shrinking.

## How deeply is India embedded in global value chains?

Forward participation in global value chains (GVCs) measures the share of India’s exports that are intermediate goods used in other countries’ exports. In 2022, forward participation was 41.2%, down slightly from 44.6% in 1995. This metric indicates that Indian inputs are not as widely demanded as before, possibly because other countries are upgrading their own supply chains. Backward participation (the FVA share) has risen, so overall GVC participation has different dimensions: India is importing more to make its exports, but its own components are not flowing as strongly into global production networks.

## How well-connected are India’s ports for global trade?

Trade needs physical links. The Liner Shipping Connectivity Index (LSCI) captures how many ships call at a country’s ports and how large they are. India’s LSCI was 398 in early 2026, up from 212 in 2006, a healthy improvement. However, China’s score is 1,323 and Singapore’s is 630. India’s connectivity has doubled, but it still lags the top maritime hubs. Better connectivity reduces freight costs and delays, so this gap partly explains why trade costs remain high for Indian exporters.

## How do India’s merchandise exports stack up against manufacturing peers?

In absolute dollar terms, India’s merchandise exports were $445 billion in 2025. That places it ahead of Thailand ($340 billion) and Bangladesh ($48 billion), and roughly on par with Vietnam ($473 billion). But China’s exports were $3,772 billion, more than eight times India’s. South Korea, with a fraction of India’s population, exported $709 billion. The raw totals show India is a significant exporter, but not at the scale one would expect from the world’s most populous country and fifth-largest economy.

## How protected are different sectors by India’s import tariffs?

The MFN tariff averages 16.2% for all products, but the sector breakdown reveals sharp variation. Agricultural products face an average tariff of 36.7%, while non-agricultural products are at 13% (both in 2024, barely changed since 2005). High farm tariffs shield millions of smallholders but also raise food prices and limit trade in a sector where India could have a comparative advantage. The uneven protection shapes which industries can access cheaper foreign inputs and which cannot.

## What is India’s share of world imports?

India’s share of world merchandise imports was 2.8% in 2025, up slightly from 2.3% in 1948. That makes India the world’s sixth-largest importer by share, behind China, the US, Germany, Japan, and the UK. As a buyer, India’s weight is growing, driven by rising demand for energy, electronics, and capital goods. This import heft gives India some negotiating power, but it also reflects a persistent merchandise trade deficit, India imports more than it exports.

## How high-tech are India’s manufactured exports?

High-technology exports, as defined by the World Bank, made up 18.6% of India’s manufactured exports in 2024, up from 9.6% in 2009. The growth is promising, but the level remains low compared to countries like South Korea or China, where high-tech goods often exceed 30% of manufactured exports. India’s figure includes pharmaceuticals and certain engineering products, but large slices of electronics and aerospace are still missing. The upward trend suggests slow diversification, but the share is not yet transformative.

## Sources

- Merchandise export and tariff data: WTO via trade-derived data.
- Exports as % of GDP: World Bank.
- Tariff and preference data: WITS (World Integrated Trade Solution).
- Economic complexity: Harvard Growth Lab, Atlas of Economic Complexity.
- Value-added trade: OECD TiVA database.
- Shipping connectivity: UNCTAD Liner Shipping Connectivity Index.
- High-tech exports: World Bank, based on UN Comtrade.

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Source: [This Indian Life](https://thisindianlife.today/articles/how-competitive-is-indias-trade-with-the-world/) · Updated 2026-06-03. Licensed CC BY 4.0. Please cite as "This Indian Life — https://thisindianlife.today".