Eminent German economist Rudiger Dornbusch, former professor of economics at Massachusetts Institute of Technology, famously said, “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”

The pattern reflects distinctly in India’s manufacturing export story.

For half a century, India struggled to export manufactured goods. That is now changing. Merchandise exports in the first four months of FY27 are up 17 percent on last year, with July alone setting a record at $44.2 billion.

There are four things that have swung in India’s favour: the rupee is at its cheapest in real trade-weighted terms since February 2014; the UK trade deal is live and the EU deal is signed in all but name; and Western rearmament and grid spending have run into capacity constraints which is creating spillovers into India.

None of this needed world trade to accelerate, it only needed world trade to hold up, while India’s share of it rose, which is exactly what is happening.

For decades, India took a large, young, cheap workforce, and repeatedly failed to turn it into an export machine. The data backs this up:

● Manufacturing value added was 12.5 percent of Indian GDP in 2024, against roughly 17 percent in 2010.

● Manufactures were 79 percent of India’s merchandise exports in 1999. They fell to 60 percent by 2013, and have clawed back only to 67 percent in 2024.

● On the new national accounts series, goods exports have slipped from 14.1 percent of GDP in FY23 to 12.1 percent in FY25.

● India’s share of world merchandise trade is still under 2 percent.

● FY26 was flat. Merchandise exports grew 0.93 percent to $441.8 billion, and in March 2026, exports actually shrank 7.4 percent when the Strait of Hormuz closed.

However, the composition is more interesting than that. Engineering goods, now 28 percent of merchandise exports, grew five percent in FY26 when the aggregate grew one percent, and were up 18 percent year-on-year in July 2026. Electronics have gone from Rs 38,000 crore of exports a decade ago to Rs 4.24 lakh crore in FY26, and are now India’s third-largest export category.

The engine behind the old strength is losing power. IT services growth is decelerating from the double digits of 2010s to mid-single digits, with expected net IT services export growth to slow on account of H-1B fee risk, and Tata Consultancy Services alone removing some 12,200 roles in FY26 as AI reshapes delivery. Services exports still grew 8.71 percent to $421.3 billion in FY26, so this is a slow structural shift and not a cliff. But the direction is unambiguous, and a currency that is no longer being propped up by a services windfall builds for a situation most export manufacturers have been waiting for.

This is the least discussed input into Indian export competitiveness, and possibly the most powerful. It compounds quietly through every quarter it persists, and does not need a single policy decision to keep working.

Two of the three big tariff walls are coming down

The India-UK Comprehensive Economic and Trade Agreement (CETA), India’s only comprehensive agreement with a G7 economy, came into force on 15 July this year. The UK removed duties on 99 percent of Indian tariff lines on Day 1. More than 50 consignments worth over $140 million shipped under the agreement on the first day of operation, averaging roughly $2.8 million each.

The India-EU FTA, concluded on 27 January 2026 after nearly two decades of talking, is the bigger prize. The European Union has offered preferential access on 97 percent of tariff lines covering 99.5 percent of India’s export value, with immediate elimination on 70.4 percent of lines representing 90.7 percent of India’s exports to the bloc. Bilateral goods trade was $136.5 billion in FY25, of which India exported $75.9 billion. Signature is expected by 2026-end and implementation targeted for early 2027, so this is something that is rather certain than just expected.