India’s merchandise trade with G7 countries rose by 6.1 per cent year-on-year to USD 263 billion in the financial year 2026. The report stated that total goods trade, comprising exports and imports, reached this level from the previous year, reflecting steady expansion in bilateral economic engagement.
However, this growth has been accompanied by a significant narrowing of India’s trade surplus with the bloc. The surplus declined sharply to USD 13 billion in FY2026 from USD 28 billion in FY2025, driven by a rise in imports while exports remained largely unchanged.
India’s exports to G7 nations remained flat at USD 138 billion in FY2026, whereas imports increased by 14 per cent to USD 125 billion. Despite the contraction in surplus, India continues to maintain a positive trade balance with four G7 economies, including the United States, Canada, Italy, and the United Kingdom.
The report highlighted a gradual increase in the G7’s role in India’s external trade structure. The bloc’s share in India’s total goods exports rose from 29 per cent in FY2021 to 31 per cent in FY2026. In contrast, its share in India’s total imports declined from 18 per cent to 16 per cent over the same period, indicating shifting import sourcing patterns.
India’s growing economic engagement with G7 countries is further supported by ongoing free trade agreements with the United Kingdom and the European Union, along with bilateral trade negotiations with the United States. These developments reflect India’s strategic intent to deepen access to advanced economies while strengthening its manufacturing base.
The report further noted India’s emergence as a high-value manufacturing hub for G7 markets, driven primarily by exports of smartphones and other telecommunications equipment. Key export destinations include the United States, the United Kingdom, Germany, France, and Italy.
Among G7 nations, the United States remains India’s largest export destination, with exports rising from USD 51.6 billion in FY2021 to USD 87.3 billion in FY2026. Simultaneously, it has also become India’s largest import partner, with imports reaching USD 53.5 billion in FY2026, registering a compound annual growth rate of 13 per cent between FY2021 and FY2026.
The report concluded that the G7 continues to function as a critical supplier of technology-intensive goods and essential industrial inputs for the Indian economy, reinforcing its role in India’s industrial and export-driven growth trajectory.
India’s evolving trade relationship with G7 economies underscores a rebalancing of global trade flows, where rising export sophistication coexists with increasing import requirements from advanced manufacturing economies.
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