India’s merchandise exports grew modestly by 1.6% in Q3 FY26, while services exports surged 7.8%, as per NITI Aayog’s latest Trade Watch Quarterly report, highlighting India’s gems and jewellery sector. The report, however, flags structural challenges, calling for targeted interventions to unlock the sector’s full export potential.
India’s merchandise exports recorded a modest 1.6% growth in the third quarter of FY2025-26 (October–December 2025), even as imports climbed at a steeper 7.9%, reflecting a cautious but resilient trade environment. Services exports, however, emerged as a bright spot, surging 7.8% and generating a sustained surplus that continued to stabilise India’s overall external balance.
These findings form part of the Trade Watch Quarterly (Q3 FY26), released by NITI Aayog Vice-Chairman Shri Suman Bery in New Delhi, in the presence of Member Shri Arvind Virmani and other senior officials.
This quarter’s edition places a special focus on India’s gems and jewellery sector, a key pillar of the country’s labour-intensive manufacturing landscape. The global market, excluding raw gold, stood at an estimated $378 billion in 2024.
India’s exports in this space were valued at $29.5 billion, capturing a 7.8% share of world exports. India’s particular strength lies in diamonds and precious metal jewellery, segments that together represent more than $207 billion in global demand.
Surat has emerged as the world’s largest diamond cutting and polishing hub, underpinning India’s position as a key global processing centre. However, the report flags critical structural challenges- fragmented MSMEs limiting value addition, heavy dependence on imported raw materials, a significant credit gap, skill and design deficits, as well as limited integration into global trading hubs, continuing restricting the sector’s full potential.
The publication calls for targeted sectoral interventions, including deeper integration into global value chains that helps in sustaining India’s export strength along with generating high-quality employment.
