India's merchandise trade with France expanded steadily to USD 16 billion in FY2026, but the country slipped into a USD 1.6 billion trade deficit as imports, led by aircraft purchases, outpaced relatively flat export growth, according to a report by Rubix Data Sciences.
The findings come as Union Finance Minister Nirmala Sitharaman is on a four-day official visit to France to co-chair the India-France Economic & Financial Dialogue and deepen bilateral economic and investment cooperation. The visit follows the conclusion of the EU-India Free Trade Agreement earlier this year, with France emerging as one of India's most important gateways into the European market.
Imports Outpace Exports
According to the report, India's merchandise exports to France remained largely range-bound between USD 7.1 billion and USD 8 billion during FY2023-FY2026. After peaking at USD 8 billion in FY2025, exports declined to USD 7.1 billion in FY2026, translating into a 2 per cent compound annual decline over the four-year period.
In contrast, imports from France rose sharply from USD 6.2 billion in FY2023 to USD 8.7 billion in FY2026, registering a 12 per cent CAGR. The report said the surge reflected strengthening domestic demand for French products, particularly in high-value sectors.
Overall bilateral merchandise trade increased from USD 14 billion in FY2023 to USD 16 billion in FY2026, growing at a CAGR of 5 per cent. However, the faster pace of import growth reversed India's trade position with France—from a USD 1.4 billion surplus in FY2023 to a USD 1.6 billion deficit in FY2026.
Export Basket Becomes More Diversified
The report noted that India's exports to France became increasingly diversified during the period.
Pharmaceutical products emerged as the fastest-growing export category, with their share rising from 6 per cent to 9 per cent, supported by growing demand for Indian generic medicines and formulations. Jewellery exports also strengthened, doubling their share from 2 per cent to 4 per cent, while electrical products, including smartphones, recorded a modest increase.
On the other hand, exports of refined petroleum products witnessed a steep decline, with their share dropping from 17 per cent to 3 per cent. Exports of turbojets and turbines also fell from 7 per cent to 3 per cent, indicating a gradual rebalancing of India's export mix.
Aircraft Continue To Dominate Imports
Aircraft remained the single largest import category from France, accounting for 42 per cent of India's imports in FY2026, up from 34 per cent three years earlier. The report linked the trend to India's ongoing defence modernisation programme and major procurement plans involving French aerospace manufacturer Dassault Aviation.
The report highlighted the April 2025 intergovernmental agreement to acquire 26 Rafale M fighter jets for the Indian Navy and noted reports that India is pursuing an additional order of 114 Rafale fighter aircraft, with a significant portion proposed for domestic manufacturing under the Make in India initiative.
Imports of turbojets and turbines also increased from 7 per cent to 9 per cent, while electrical switching devices and industrial valves maintained stable shares, reflecting sustained demand across India's aerospace, industrial and infrastructure sectors.
France Remains A Strategic Economic Partner
The report said France continues to be one of India's most significant economic partners within the European Union. It ranked as India's fourth-largest EU trading partner in merchandise goods during FY2026 and the 11th-largest source of foreign direct investment, with cumulative FDI inflows of around USD 12.3 billion between January 2000 and March 2026.
With more than 1,000 French companies operating in India, the strengthening trade framework under the EU-India Free Trade Agreement is expected to deepen cooperation in sectors including aerospace, defence, renewable energy and technology, while creating fresh opportunities for trade and investment. |
