• Team Xport-Pro

Top 5 Hottest Sectors in India for Exports

Updated: May 27

It’s critical to know about a nation’s exports and imports whenever you’re thinking about trading or investing. The market research that you conduct, and the knowledge gained from it can make or break an export/import business. This applies especially to a nation like India which is growing so fast that it recently became the world’s 15th largest export economy.

India maintained its total value of exports in 2020 at $322 million but with a few additions and subtractions. The overall trends in Indian trade have been pretty uniform in the last few years but with the onset of the global pandemic, the trade was disrupted and there were some changes observed.

Today, we’ll be taking a deeper look at the sectors of Indian exports which generally dominate in total value. We’ll also be discussing how these trends have been distorted in the last year so that you can have a holistic idea of the bigger picture. So let’s get into it and start analysing the most popular export sectors of Indian trade.

1. Mineral Fuels:

Total Value: US$44.1 billion

Percentage of Total Exports: 13.7%

Of all the mineral fuels that India ships worldwide, petroleum oil is perhaps the one with the highest share. With the presence of giants like ONGC, HPCL, Reliance Petroleum, and others it’s no surprise that the petroleum industry plays an important role in sustaining the economy. In 2020, the petroleum oil export stood at $26 billion which is roughly about 9.5% of the total Indian exports.

India is also renowned for having the fifth largest coal reserves in the world and other than coal. We have multiple other mineral fuels that are used in energy generation which is why India’s exports are largely dominated by mineral fuels.

2. Gems and Precious Metals:

Total Value: $36.7 billion

Percentage of Total Exports: 11.4%

It should come as no surprise that India has a fairly large share in the global exports of gemstones and precious metals since our culture has placed relatively high importance on owning ornaments for financial security. India itself consumes about 20% of the global gold produced and turns 75% of it into jewellery which is one of the highest numbers in the world.

The diamond export from India is one of the most important ones since India exports the majority of raw material for the global jewellery industry. It’s estimated that about $15 billion worth of worked/unworked diamonds along with $7.6 billion worth of precious metals are exported to major export partners like the USA, UAE, Hong Kong, Russia, Singapore, and China.

3. Machinery and Electronics:

Total Value: $21.2 billion

Percentage of Total Exports: 6.6%

This is one of the fastest-growing sectors of the Indian economy and the export figures reflect that as well. Despite the growing prevalence of computers in the world and the emergence of Bengaluru as a technology hub in India, the mechanical equipment exports of India still overshadow the electronics export. This is proof of how trusted and in-demand the Indian machinery is throughout the world.

The mechanical equipment includes pumps, heavy industrial tools, construction machinery, and agricultural equipment like self-propelled harvesters and tractor-driven harvesters. The mechanical equipment industry stands at around $13.5 billion in export value while the electronics industry stands at about $9 billion which is an impressive figure even when not combined.

4. Organic Chemicals:

Total Value: $18.3 billion

Percentage of Total Exports: 5.7%

The chemical industry is a silent backbone of the Indian export industry and it serves to support not only the forex reserves but also the agriculture and manufacturing industry in India. If we consider the chemical industry as a whole and also include the inorganic chemicals, petrochemicals, and pharmaceuticals then it’ll become the largest contributor to Indian exports. However, the scope of this article will be restricted to organic chemicals only.

India exports these chemicals to multiple nations like the USA, China, Indonesia, Malaysia, Brazil, Turkey, Italy, and many others. The products that fall into this rapidly expanding industry include benzoic acid, benzyl benzoate, benzyl acetate, bornyl acetate, paraformaldehyde, and many more.

This industry is a bulwark of Indian exports and there’s no doubt that it’s not going anywhere anytime soon. Further, it’s supported by the endeavours of the small, medium, and large enterprises that ensure that there will be no monopolisation and no artificial shortages that can negatively affect the exporters.

5. Automobiles:

Total Value: $17.2 billion

Percentage of Total Exports: 5.3%

As a country that stands at the first position in tractor manufacturing and the second position in bus manufacturing, India stood as the fifth largest automotive market in 2019. It’s obvious that the automobile industry will contribute a fairly large share to the export volume of India. Even the cars that are exported account for about $4.6 billion worth of trade.

With multiple companies setting up their manufacturing facilities in India, the most recent being Tesla, India is projected to grow even faster in the upcoming years. Indian automotive industry is expected to be standing at a $16-18 trillion mark by 2026 if this momentum is maintained.

The government has launched many initiatives to promote EVs as well which can play a decisive role in increasing the export capacity of India in the upcoming years as the world transitions to cleaner energy.

Final Take

These are currently the top-performing sectors of the Indian economy that account for more than 40% of the total exports. If you’re an exporter then this list will be immensely helpful to you as it can help plan out any of your future endeavours. This list is susceptible to changes over time as the structure of the Indian economy and the global economy changes, as was seen during the pandemic. Even though the trade took a hit during the worldwide pandemic, India recovered swiftly and as the global situation improves, it’s expected that Indian exports will increase as well.