Coffee beans in Karnataka, India. Photo Credit: Abdulla Al Muhairi, Wikipedia Commons

Coffee beans in Karnataka, India. Photo Credit: Abdulla Al Muhairi, Wikipedia Commons
1 Analysis Business South and Central Asia 

India’s Trade Performance And Case Of Brewing Success With Coffee Exports – Analysis

Dr. Sarah Mujeeb 0 Comments

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The release of India’s first month’s trade data for the financial year 2025-2026 on May 15, 2025 sparked public discourse dominated by concerns over rising imports and a widening merchandise trade deficit.

Experts largely attributed these trends to global uncertainties, but such a myopic view fails to consider the broader international trade dynamics that frame trade deficits as not inherently detrimental for a growing economy. Particularly, an increase in imports of raw materials and intermediate goods can signal expanding production capabilities and export potential rather than economic weakness.

April 2025 Trade Data: Exports, Imports and Deficit Analysis

Factual assessment of trade numbers is incomplete if it lacks reasoning backed by international trade dynamics which underline the basics of trade deficits as not being inherently bad for a growing economy that shows growth in imports in the Quick Estimates data pertaining to those commodities which are in the nature of raw materials and intermediates.

Following the contemporary trend of analysing India’s trade performance even with a narrow prism of with only one-month trade data, India’s trade data for April 2025 presents a strong and encouraging economic momentum in the export sector. Merchandise exports rose impressively to US $ 38.49 billion, reflecting a 9.02% year-on-year increase. This marks the second-highest export performance in any April over the past decade, showcasing India’s growing competitiveness in global markets. Key contributors to this growth include a 39.51% surge in electronic goods, an 11.28% rise in engineering goods and a 14.43% increase in ready-made garment exports, indicating robust demand for Indian products abroad.

While imports grew to US $ 64.91 billion, reflecting domestic demand and investment in growth sectors like energy and electronics, this also positions India strategically as a country actively engaging in global trade to fuel its development. The resulting trade deficit of US $26.42 billion, though elevated, reflects India’s expanding economy, rising consumption and value chains with imports linked to export growth— all indicators of underlying economic strength and opportunity. Overall, the April 2025 trade performance underscores India’s resilience, rising global trade integration and the continued strengthening of its export-oriented sectors.

Long-Term Export Trends and Growth Trajectory

Looking beyond a single month, India’s total exports—including both merchandise and services—reached a historic high of US $ 825 billion in 2024-25, representing a compound annual growth rate (CAGR) of 5.8% from 2014-15 to 2024-25 and a year-on-year growth of 6% from 2023-24.

Export values have grown steadily over the past decade, from US $ 468.4 billion in 2014-15 to US $ 778.1 billion in 2023-24, underscoring India’s rising stature in global trade. Notably, India’s non-petroleum exports hit a record US $ 374.5 billion in 2024-25, up 6.1% year-on-year, reflecting diversification and resilience in India’s non-volatile exports segments.

India’s Exports and Sectoral Diversification

Among the drivers of India’s export growth are high-performing sectors like engineering goods, electronics, pharmaceuticals and textiles. However, the agriculture and allied sectors, despite their strategic importance, often receive less attention.

In 2024-25, exports in this sector (Chapters 1-24) increased by 7.4% to US $ 51.9 billion, up from US $ 48.3 billion in 2023-24. A focused analysis reveals significant gains in India’s global share of exports for Chapter 9 commodities—coffee, tea, maté, and spices—which increased from 6.05% in 2015 to 9.05% in 2024. This steady rise reflects India’s growing competitiveness and strengthened position in the global agri-commodity value chain.

Brewing Success: India’s Coffee Steeping Stronger in Global Markets

Coffee exports stand out as a key success story, reaching a historic US $ 1.81 billion in 2024-25, up from US $ 0.81 billion in 2014-15, with a CAGR of 8.37%. Karnataka leads production with 71% contribution followed by Kerala. The sector benefits from Geographical Indication (GI) registrations for prominent regions such as Bababudangiris, Chikkamagaluru, Coorg, Wayanad and Araku Valley, enhancing brand value and market differentiation. Technological initiatives like the Coffee Krishi Taranga IVRS-based advisory and the ‘Kaapi Soil Health Management & Monitoring’ portal further support sustainable growth and improved productivity.

Specialty Coffee: Quality, Innovation, and Market Prospects

One of the most significant growth drivers for the Indian coffee sector is the specialty coffee segment. Established production zones in Karnataka, Tamil Nadu, and Kerala, alongside emerging northeastern areas, are producing Arabica and Robusta beans that meet international specialty standards—often achieving 80+ scores in SCA (Specialty Coffee Association) grading.

Indian microlots are gaining recognition in global cupping protocols and competitions, reflecting qualitative improvements and sensory distinctiveness. Vertically integrated domestic brands such as Blue Tokai, Third Wave Coffee and KC Roasters have pioneered direct-to-consumer models emphasizing estate traceability, post-harvest innovations and artisanal roasting techniques. 

Environmental Sustainability and Compliance with EU Regulations

Environmentally, Indian coffee cultivation differs notably from many other countries where coffee farming often involves clearing existing vegetation. Indian coffee grows under an intact forest canopy making it more sustainable and aligned with environmental regulations like the European Union’s Deforestation Regulation (EUDR). The EUDR bans imports of coffee sourced from areas deforested after 2020, positioning India’s forest canopy-preserving coffee cultivation as a competitive advantage.

Conversely, China has opposed specific EUDR provisions, particularly the requirement to share farm geolocation data for traceability, citing concerns over sensitive information. This stance may hinder Chinese coffee exports to the EU market, while Indian exporters, supported by robust traceability systems, are better equipped to comply and capitalize on growing EU market opportunities.

Strategic Implications and Future Outlook

Overall, India’s export profile showcases strong global positioning in both traditional and niche sectors. Continued policy support combined with favourable global trade dynamics places India in a strong position to maintain and enhance its competitive edge internationally. With diversification, sustainability and innovation as pillars, India’s trade outlook remains optimistic and reflective of its expanding role on the global stage not only in high value-added sectors but also in India’s core strength as manifested by coffee as just one out of many examples of India’s agriculture and allied sector! As India brews its future in international trade, the aroma of coffee exports promises to linger as a distinct flavour marking the country’s competitive edge in international markets.

REFERENCES

Dr. Sarah Mujeeb

Dr Sarah Mujeeb is an Indian Economic Service Officer, Government of India. She is Director, Department of Commerce, Ministry of Commerce and Industry, GoI.  She holds MPhil and PhD in Economics from JNU, New Delhi. The views expressed are purely personal in nature.  

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