Bengaluru: Karnataka's exports grew by 9.5% year-on-year in 2025-26, with Bengaluru continuing to power the state's export economy through its strong services and technology base, while also contributing significantly to merchandise trade.
According to an analysis by the Visvesvaraya Trade Promotion Centre (VTPC), the nodal agency under the state's industries and commerce department for promoting international trade, Karnataka's total exports stood at approximately Rs 19.7 lakh crore in 2025-26, up from Rs 18 lakh crore in the previous financial year.
Software and services remained the largest contributors to the state's export basket. Exports from the sector rose to around Rs 16.4 lakh crore, compared to Rs 15.1 lakh crore in the previous year. Merchandise exports also registered robust growth, increasing to nearly Rs 3.3 lakh crore from Rs 2.9 lakh crore.
Engineering goods, basic chemicals, pharmaceuticals and cosmetics recorded healthy growth during the year. However, petroleum exports declined to Rs 4.3 lakh crore from Rs 5.3 lakh crore in 2024-25, while cashew exports witnessed a marginal dip.
At the district level, Bengaluru Urban emerged as the largest contributor, accounting for exports worth Rs 10.6 lakh crore. Dakshina Kannada, Kolar and Bengaluru Rural followed. Districts such as Bengaluru South, Ballari, Hassan, Kodagu and Mandya recorded notable export growth, while Haveri, Dakshina Kannada and Dharwad reported declines.
Karnataka retained its position as India's top software and services exporter and ranked fourth in merchandise exports during 2025-26.
The state outperformed the national average in the first quarter, recording a 12.5% growth in combined merchandise and services exports, compared to India's overall export growth of 5.5%. The growth was driven by engineering goods, iron ore and minerals, spices, semiconductors, agriculture and aerospace sectors. Exports to Japan rose 35% year-on-year during the period.
In the second quarter, merchandise exports grew by 27.6%, while services exports increased by 8.7%, resulting in overall export growth of 11.4%. Iron ore and minerals, engineering goods, automobiles, agriculture, marine products and aerospace recorded strong gains, while textiles, garments, coffee, gems and wool products saw a decline.
The US, UK, UAE, Netherlands, Singapore and China were among Karnataka's major export destinations during the first half of the financial year.
Exports to the Middle East also strengthened, led by engineering goods, electronics, organic chemicals, pharmaceuticals, coffee and spices. The UAE and Saudi Arabia emerged as key markets, with Karnataka exporting goods worth Rs 7,561 crore to the region during the second quarter alone.
MB Patil, industries minister, said: “We have been in the top five for many years and intend to maintain that position. Going forward, our focus will be on strengthening manufacturing. Our department is encouraging exports by offering incentives, not just in Bengaluru but across Karnataka. The state already accounts for nearly 60% of India's defence manufacturing, and we are introducing several policies, including a new industrial policy with significant incentives for manufacturing.”
Uma Reddy, FKCCI president, adds, Karnataka continues to lead because of its strong services ecosystem, startup culture and educational institutions. “Merchandise exports such as engineering goods, petroleum products, chemicals, textiles, coffee and aerospace continue to perform well due to sustained demand, while manufacturing remains challenging because of infrastructure and skilled manpower constraints. The relatively slower export growth this year is largely due to global uncertainty arising from ongoing global conflicts,” Reddy said.
