Beyond Los Angeles and Rotterdam: Can Durban, Rio de Janeiro drive India’s next export boom?

For Indian exporters, the next big opportunity may not lie in the traditional markets of the US and Europe; it may lie in the countries that, like India, are themselves part of the Global South. This is one of the clearest inferences from the recent surge in trade between these countries. The South-South merchandise trade—especially between developing economies—reached $7.2 trillion in 2025, up 17.2% from 2024 and more than 14 times from around $500 billion in 1995, according to UNCTAD. In fact, the share of South-South trade in 2025 in global merchandise trade increased to 28% from 11% in 2020. These numbers highlight the growing significance of the Global South in world commerce.

The shift, experts point out, is particularly significant because these developing countries are no longer simply exporting finished goods to rich economies; they are increasingly supplying industrial components, intermediate goods, and key raw materials and inputs to one another, creating production networks that cut across Asia, Africa, the Middle East, and Latin America.

For India, a country with well-established trade flows with traditional markets, this growing trend creates a potentially significant new export opportunity. But the rapid growth of South-South trade does not automatically mean that the world’s sixth-largest economy by nominal GDP (gross domestic product) will capture a larger share of it. Experts say doing so will require a change in strategy, one that goes beyond simply increasing exports to building deeper commercial and production links across the Global South. With India set to host the 18th BRICS Summit on September 12-13, 2026, the timing could not be more ideal.


South-South trade is becoming a structural shift

“Faster growth in developing economies and a shift in the underlying trade architecture are both at play, but the weight of evidence points to a structural shift,” says Sachin Chaturvedi, Vice-Chancellor of Nalanda University and former director-general of the Research and Information System for Developing Countries (RIS), a New Delhi-based think tank focused on issues, including South-South cooperation and global trade.

He says the South-South trade expansion to more than $7 trillion today is partly a ‘scale effect’, but the underlying trade architecture has also genuinely changed.

Recent data show the Global South’s share in global goods trade increased from 20.3% in 1990 to 44.9% in 2024, while its share of services trade expanded from 19.3% to 32.6%. But the more important change is in the composition of that trade, argues Chaturvedi. “The composition of South-South trade differs fundamentally from South-North trade,” Chaturvedi says. “Intra-South trade is dominated by intermediate goods and components, while exports from South to North remain concentrated in finished goods.”

Southern economies are, therefore, increasingly supplying inputs to one another, creating production links that can deepen trade without relying entirely on demand from developed markets. “This signals the Global South has built its own production networks and value chains,” he says.

This has, in fact, driven broader convergence across the Global South. Least-developed countries, transitional economies, and other developing nations have grown faster and narrowed gaps with emerging economies. This convergence is visible across foreign direct investment (FDI), goods trade, and increasingly, services as well, says Chaturvedi. “This broad-based convergence, spanning FDI, goods trade and increasingly services, is what marks this as structural rather than cyclical,” he says.

The shift in global trade flows is also taking place against a backdrop of a more fragmented global trading system. Tariffs, geopolitical tensions, and supply-chain disruptions are compelling companies to diversify their sourcing and markets, giving developing economies another reason to strengthen trade relations among themselves.

Chaturvedi believes the South-South trade could become one of the principal engines of global trade growth over the next decade. He points to the 2002-07 period of global buoyancy, when trade in goods among Global South economies grew by nearly 22% compared with 15% for the Global North. He also highlights that several studies have found South-South free trade agreements to generate ‘proportionally larger bilateral trade gains’ than North-South agreements, largely by deeper regional integration.

But faster growth alone will not make the trend permanent, experts caution, as developing economies will need to address the infrastructure, policy, and production constraints that still prevent trade links from reaching their full potential.

“First, infrastructure and logistics, where much of South-South trade potential is still constrained by weak connectivity,” Chaturvedi says. “Second, further liberalisation of trade and investment regimes within the South itself, since intra-South barriers remain higher than South-North ones in many product categories.”

The third requirement is diversification beyond commodities into intermediate manufactured goods and technology-intensive sectors. Chaturvedi says these three conditions will determine whether the South-South trade boom becomes a lasting feature of global commerce rather than simply a consequence of faster growth in developing economies.

India sees a new export opportunity

Indian exporters are looking at this changing dynamics carefully, as companies search for markets beyond the traditional centres of global consumption. “Indian exporters are increasingly looking at the Global South as a major growth engine,” says Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO).

The US and Europe remain critical markets for Indian exporters, but Sahai says demands from Africa, the Middle East, ASEAN, and Latin America are growing steadily due to urbanisation, infrastructure development, rising incomes, and supply-chain diversification.

The biggest beneficiaries include engineering goods, automobiles, and auto components, pharmaceuticals, electrical machinery, chemicals, textiles, processed foods, and agricultural products.

However, the pattern differs from market to market. According to Sahai, the UAE has emerged as a key gateway market following the Comprehensive Economic Partnership Agreement (CEPA), while Africa is witnessing growing demand for Indian pharmaceuticals, two-wheelers, machinery, and healthcare products. “Latin America is showing strong potential for auto components, chemicals, and engineering products. India’s record engineering exports and expanding pharmaceutical presence in Africa and Latin America reflect this trend,” says Sahai, adding that the Gulf occupies a unique position for India, serving both as a major market and a re-export hub.

The broader message is clear: an FTA can lower the tariffs at the border, but it cannot, on its own, create a distributor, warehouse, or after-sales network on the other side. The UAE, for instance, has become an important transit market after the India-UAE CEPA, and Sahai believes that India can significantly increase its share of South-South trade over the next five years by leveraging such trade agreements.

“The Global South is likely to be one of the largest sources of incremental trade growth over the next decade, and India is well positioned to benefit,” he says. Africa, the Gulf region, ASEAN, and Latin America, as per Sahai, offer the biggest opportunities for Indian companies, particularly in engineering goods, automobiles and auto components, pharmaceuticals, chemicals, electronics, renewable-energy equipment, agricultural machinery, food products, and healthcare solutions.

But the opportunity will increasingly depend on whether Indian companies can turn potential markets into sustained commercial relationships and build a presence beyond the point of export. India is already a beneficiary of this reorientation, Chaturvedi says, but he contends that India’s engagement with the Global South needs to move from transactional trade towards deeper value-chain integration.

Notably, India’s trade deficit with ASEAN has widened, while its trade with Africa remains concentrated in a handful of countries. That suggests that India’s challenge is not simply finding more markets but developing deeper economic links within them. “This relationship needs to shift from transactional to value-chain integration,” Chaturvedi says.

Market access is no longer enough

For Indian exporters, gaining tariff access to a market is only the beginning. The harder task is building the commercial infrastructure needed to turn that access into sustained sales. “Tariffs matter, but the bigger challenge is market penetration rather than market access,” Sahai says.

He highlights the long-standing constraints facing Indian exporters, including high logistics costs, limited distribution networks, payment and financing risks, regulatory and standards-related barriers, and intense competition from China.

Chinese companies have spent decades building the networks that allow products to reach customers, receive financing, and obtain after-sales support within developing markets. This gives Chinese companies a major advantage over Indian firms, particularly small exporters trying to tap foreign markets.

“For Indian MSME exporters, the challenge is not producing competitively but ensuring products are available locally, supported by after-sales service, and backed by affordable trade finance,” says Sahai, adding that India needs to move from an “export from India” model to a “presence in the market” model. One way to address that gap, he says, is through overseas warehouses, display centres, and fulfilment facilities closer to customers. Such infrastructure could become particularly valuable as shipping disruptions make long and unpredictable supply chains harder to manage.

He also points to the Facilitating Logistics, Overseas Warehousing & Fulfilment (FLOW) scheme under the Export Promotion Mission, which supports the establishment of overseas warehouses, display centres and fulfilment facilities. Sahai says FIEO is exploring the possibility of establishing such facilities in key geographies to support just-in-time delivery, particularly as shipping disruptions have become more frequent.

However, the challenges for Indian exporters seeking to expand their South-South trade extend beyond just logistics. They also need to meet the technical and regulatory requirements of individual markets, which can be particularly difficult for smaller firms entering unfamiliar economies. Sahai further points to the Trade Regulation, Accreditation & Compliance Enablement (TRACE) scheme as another potentially useful measure. “The TRACE scheme, which provides micro and small units with up to 95% cost reimbursement for testing and certification and up to 80% for medium enterprises, will come quite handy in market access and market penetration,” he says.

India needs to become part of the value chain

The challenge for Indian exporters becomes clearer when viewed through the lens of global value chains. Experts point out that higher export volume does not necessarily mean moving higher up the production chain. “India’s integration into global value chains has increased but remains uneven,” says Nisha Taneja, professor at the Indian Council for Research on International Economic Relations (ICRIER).

According to OECD Trade in Value Added data cited by Taneja, imported intermediate inputs embodied in India’s exports rose from 21.9% in 2010 to 25.7% in 2022. At the same time, India’s domestic value added embedded in other countries’ exports increased only marginally, from 16.7% to 17.1%. (Can we get more recent data?)

The two figures point to an imbalance in India’s participation in global production networks. Taneja says India is becoming more integrated as a processor and assembler using foreign inputs but remains a relatively weak upstream supplier of high-value intermediate goods and services.

That imbalance could become increasingly important as the Global South develops its own production networks. According to Tanjeja, if companies are diversifying supply chains, India could position itself as a manufacturing and sourcing hub connecting Africa, the Gulf, ASEAN, and South Asia. In her view, trade agreements can facilitate cross-border sourcing, investment, and trade in services, and that sectoral value chains can be developed across electronics, automobiles, pharmaceuticals, textiles, engineering, food processing, and renewable energy. However, she contends that to realise this potential, India must address several domestic constraints.

“Realising this opportunity requires eliminating inverted duty structures, ensuring tariff neutrality for imported intermediates, enabling firms to scale, strengthening manufacturing clusters and embedding services in exports,” Taneja says, adding that efficient ports, shipping links, multimodal corridors and digital trade infrastructure must connect India more effectively with these markets.

The objective is, therefore, not simply to increase India’s exports to developing economies. India needs to build production networks, logistics infrastructure, commercial relationships, and a local presence to become part of the Global South’s own growth story. “Success ultimately means raising forward participation alongside backward participation, making India a hub for the Global South rather than simply an exporter to it,” Taneja says.

The opportunity is huge. As the geography of global trade changes, India’s next export story may well be written not only in New York or Berlin but increasingly in Nairobi, Jakarta, São Paulo, and Riyadh.