Overall, India’s engineering exports dropped by 6.62% to US$ 8.75 billion in July 2023 from US$ 9.37 billion in July 2022.
Amid the slackening demand from major markets such as the US and China, shipments to Russia, however, continued its uptrend and more than doubled to US$ 123.65 million in July 2023 from US$ 55.65 million in July 2022.
At a total shipment value of US$ 123.65 million, exports to Russia in July were higher than Australia which imported engineering goods worth US$ 115.14 million from India, a 5.7% on-year decline.
During the same period, engineering exports to the US declined 10.4% year-on-year to US$ 1.44 billion. Engineering exports to China also declined 10% year-on-year in July 2023 to US$ 197.98 million.Engineering exports to Germany remained positive and grew 2% year-on-year to US$ 346.36 million in July this year even as the key European economy remained in the grip of a slowdown.Region-wise, positive year-on-year growth in July 2023 was noted majorly in West Asia and North Africa (WANA), North East Asia, and CIS countries. Regions witnessing a drop in exports during July 2023 include North America, ASEAN countries, EU countries, Sub-Saharan Africa, South Asia, Latin America, and Oceania. The decline was mainly due to a drop in exports of Iron & Steel and Aluminium coupled with falling global demand due to recession-like situations in major developed regions.
“Eight consecutive months of year-on-year decline in engineering exports since December 2022 necessarily implies a depressing scenario of global trade, especially of engineering. Our analysis shows that the decline is mostly due to the metal sector and iron & Steel and aluminium in particular, the two major components of engineering exports from India,” EEPC India Chairman Arun Kumar Garodia said in a statement.
Garodia noted that in such a situation it is important for India to diversify its markets. “It is an opportunity for India to diversify especially to non-traditional markets of Africa and Latin America,” he said.
According to the Quick Estimates of the Department of Commerce, Government of India, the share of engineering exports in India’s total merchandise exports was 24.26% during July 2023.
The month of July 2023 saw the fourth straight month of decline in engineering exports during the ongoing fiscal but pace of decline moderated to single digit once again from a double-digit year-on-year decline in June 2023.
Cumulative engineering exports declined by 7.24% to US$ 35.57 billion during April-July 2023-24 from US$ 38.34 billion during the same period last fiscal.
As many as 14 out of 34 engineering panels witnessed positive year-on-year growth in July 2023, while the remaining 20 panels witnessed negative growth in exports.
Major engineering products like Iron and Steel, Products of Iron and Steel, most non-ferrous products including Aluminium, Zinc, Tin products barring Copper, Nickel & Lead products, Industrial machinery, and parts, Two & Three wheelers, Auto Components and parts, Auto Tyres, Railway Transport, Hand tools, and Mica products witnessed decline in exports during July 2023 vis-à-vis July 2022.
Excluding the export of iron and steel, engineering exports recorded a higher 6.85% year-on-year decline in July 2023 but a much lower 3.70% decline during April-July 2023.
According to a report by UNCTAD, the global trade scenario is apprehended to remain pessimistic in the second half of 2023 owing to several negativities like the geo-political crisis in the Russia-Ukraine region, the slowdown in developed economies that may turn to recession in some nations due to persistent inflationary pressure, debt crisis and the partial slowdown in North-East Asia centering China.
