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India’s rising export powerhouse. India’s export story is evolving from low-cost economies towards sophistication. Having reached US$821 bn in FY25, almost twice the level of a decade ago, the country is now transitioning beyond its services-led roots toward a new phase centred on advanced manufacturing, digital capabilities, and supply-chain depth.  By 2028, exports are expected to climb to US$1.7 tn, marking one of the fastest expansions among major economies. Source: Ministry of Statistics and Programme Implementation, KPMG With rising geopolitical bifurcation, multinational firms are accelerating “China+1” diversification. Moreover, India’s digital infrastructure (spanning payments, logistics, and e-commerce) amplifies export efficiency.      According to KPMG, a 1% rise in domestic digital connectivity increases international trade by about 1.5%, and the country’s Indo-Pacific trade corridors now account for nearly a fifth of global digital trade. Structural Drivers of India’s Export Growth – Manufacturing ascent and policy tailwinds     India is rapidly expanding its manufacturing base under the “Make in India” and “Atmanirbhar Bharat” initiatives. The sector’s GDP contribution is projected to rise from 16% to 21% by 2031, with manufacturing exports set to double over the same period. Targeted production-linked incentives (PLIs) and US$10 bn earmarked for semiconductor fabrication underscore the government’s resolve to build deep industrial capacity and reduce import dependency. – Technology and talent advantage One-third of the world’s STEM graduates are Indian, feeding innovation across electric vehicles, advanced engineering, and pharmaceuticals. Engineering, research, and development (ER&D) exports could triple from US$45 bn today to US$130–170 bn by 2030, positioning India as a global hub for digital manufacturing and design outsourcing. – Rising investment and supply-chain strength With infrastructure spending targeted at US$1.8 tn by 2025, India is reinforcing logistics, energy, and port connectivity. This backbone supports export competitiveness by lowering costs and improving reliability. Export Diversification: Broadening the Growth Base India’s export expansion is not just a story of scale, but also one of diversification. The country now exports to nearly 200 countries, with the top ten destinations, led by the U.S., UAE, and the Netherlands, comprising just over half of total exports.  What’s striking is the rise of non-traditional markets: exports to Africa, Latin America, and West Asia are growing at double- and triple-digit rates as India deepens trade relationships and negotiates new free-trade agreements. Source: Government of India: National Import-Export Record for Yearly Analysis of Trade (Mar 2025) This diversification serves two critical functions. First, it cushions India against external shocks such as Western tariff regimes or regional slowdowns, making export growth more durable and cyclical resilient. Second, it broadens the product mix – from low-margin commodities to high-value goods such as electronics, specialty chemicals, and engineered components. In effect, India is not only selling to more markets but selling smarter: capturing higher value per unit of export while aligning with global trends in sustainability, digitalisation, and clean manufacturing. In essence, India is seeking to move up the value-chain through greater “complexity” in its exports.   Investing in the Export Story: A Case for Active Management For equity investors, India’s export expansion demands a portfolio rethink. The MSCI India Index remains heavily weighted toward domestic-consumption names such as financials, energy and staples, while the most dynamic export stories lie beyond these benchmark giants. Active managers can participate in the export narrative by focusing on lesser-represented companies shaping India’s next phase of export growth: – Samvardhana Motherson (Auto and ancillaries) With operations spanning 40 countries, Motherson has evolved from a domestic parts supplier into one of the world’s top automotive component manufacturers.  – Aurobindo Pharma (Pharmaceuticals)  Among the world’s largest generic drug exporters, Aurobindo’s rising share of complex formulations in regulated markets positions it at the high-value end of India’s pharma chain. – UPL (Chemicals) As the world’s fifth-largest agrochemical player, UPL exemplifies India’s ability to scale globally competitive chemical manufacturing while expanding into sustainable crop-protection and bio-solutions. India’s export resurgence marks a long-term opportunity built on competitiveness, digital strength, and diversification.  For investors looking to benefit from this structural shift, active management within a specific India Fund or ETF allows focused exposure to the companies leading India’s export growth. This is not a passive story; the next leg of returns will accrue to investors willing to look beyond index heavyweights, toward high-conviction businesses driving India’s outward transformation. 

The structural story remains intact and outperformance to resume shortly. Over the last 12 months to 30 September 2025, India has underperformed other markets:  Source: MSCI Giving up some gains  As you can see the last 12 months hasn’t been great. Despite this India’s returns have been very robust over the last 5 years. Perhaps only second to the Mag-7 led, US markets, superior to its emerging market peers.  Over the last 12 months (to 30 Sept 2025) India’s markets come off due to:  Normalising earnings growth (from the rampant pace of 20% CAGR from FY20-24) Macro clouds regarding Trump’s tariff aggression towards India, and High valuations in India due to a strong corporate and macro environment (market peaked in September 2024). Liquidity Support Over the last 12 months we have seen the Central Bank (RBI) cut rates by 100bps, with significant potential to cut further, given inflation is running < 2% at present, whilst cash rates are at 5.50%.  Additionally, tax rates have been cut on the personal level (raising threshold for personal tax) and the GST rationalised (top rate of 28% cut to 18% for many goods) – which should provide good impetus for consumption over the next 6-12 months in particular. Trade Deals Additionally, it is likely that the US and India will achieve a trade deal and India may be able to cement many other trade relationships with other regions (as seen recently with the FTA with the UK) to make its export story gather legs going forward.  Indian markets have illustrated leadership in October 2025 so far, with a view to this playing out. This should be good for India’s corporate earnings through its export industries, where it is seeking to move up the value-chain like Pharmaceuticals, IT Services, Auto & Ancillaries.  A positive outcome of the troubled relationship of recent with the US, is India’s focus elsewhere on regions like SE Asia, Middle East, Africa and LATAM, to grow and diversify its export base, long-term. Earnings Normalising Over the last few quarters earnings are showing signs of starting to normalise towards India’s long-term run rate of nominal earnings at around 11% CAGR. Whilst there still may be a phase “time correction” left to play out, it is likely that India will resume return equity market leadership once some of the macro headwinds at play turn more favourable.  Be Active  However, only active funds and ETFs may benefit from this theme, as market cap weight and EM/Asia fund exposure heavily favours local financials and consumer stocks (the latter of which is what puts India on the map as an expensive equity market), rather than India’s exporting cohort of companies.