India, Jan. 28 -- External sector performance has reinforced resilience. The current account deficit has stayed close to 1-1.3% of GDP, financed comfortably by a robust services trade surplus and steady remittances. In FY26 so far, services exports-particularly IT and business services-have continued to offset weakness in merchandise exports, cushioning the economy from global manufacturing slowdowns.

The impact of rising tariffs and trade restrictions on India's exports has been managed through adaptation. Faced with trade fragmentation, exporters have increasingly diversified destination markets, reducing excessive dependence on a few geographies and expanding presence in emerging regions across Asia, Africa, Latin America, and West As...