Significantly, engineering exports to Russia almost trebled in June 2023 and stood at US$ 116.9 million. In cumulative terms, it jumped four-fold during the April-June period of the current fiscal to US$ 337.4 million as compared to US$ 89.7 million in the same period of FY23.
The latest data shows engineering exports to the US fell 12.5% year-on-year to US$ 1.45 billion as compared to US$ 1.65 billion in the same month of the previous year. On a cumulative basis, the decline was even sharper with total shipments value standing at US$ 4.30 billion during the April-June period of 2023-24 as against US$ 5.32 billion in the same period of the previous fiscal.
Engineering exports to the European Union (EU) fell as much as 16.2% year-on-year in June 2023 to US$ 1.51 billion. Cumulatively, it fell almost 10% to US$ 5.35 billion in the April-June period of FY24.
In June 2023, engineering exports to China declined 20% year-on-year to US$ 184 million.
Engineering shipments to WANA, CIS, and the North East Asia region grew 10.9%, 161.2%, and 0.5% respectively in June 2023 over June 2022.Overall, India’s engineering exports continued their decline in June 2023 for the third straight month in fiscal 2023-24 as it was recorded at US$ 8.53 billion, approximately 11% less than the same month last fiscal. In cumulative terms too, the decline was around 7.45%.”It is the metal sector that has been the most significant contributor to the decline. This has been a result of weakening global demand. The latest news has indicated that global demand for steel weakened further with slower offtake from China’s construction sector,” said EEPC India Chairman Mr. Arun Kumar Garodia.
Mr Garodia further said, “Similar concerns including the banking crisis in the US have also affected the demand and price of copper, aluminium, lead, and zinc. It is also reflected in India’s export performance, indicating a sharp decline in exports to some of India’s major partners, including the USA, EU countries, and China. The situation is expected to further worsen with the implementation of CBAM regulations by the EU. The debt crisis has also led to declining exports to South Asia, India’s immediate neighbourhood.”
Excluding the export of iron and steel, engineering exports recorded a lower 6.95% year-on-year decline in June 2023 and a 2.62% decline during April-June 2023. This shows that steel plays a spoilsport in the downfall of engineering exports.
As many as 17 out of 34 engineering panels or segments witnessed positive year-on-year growth in June 2023, while the remaining 17 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, and hand tools witnessed a decline in exports during June 2023 vis-à-vis June 2022.
Elaborating on trends in engineering exports, EEPC India Chairman Mr Garodia said that India’s exports to new FTA partners UAE and Australia have increased since the signing of the trade pacts and therefore more comprehensive FTAs with potential partners will be the right step for India to achieve its goal of US$ 2 trillion exports by 2030.
He noted, “Globally, there is a growing trend of “friend-shoring” which indicates diversification of trade towards a political ally. Also, several companies and economies are considering a China plus policy in the aftermath of the Covid pandemic. It is an opportunity for India to diversify especially to non-traditional markets of Africa and Latin America. This can be done by pursuing comprehensive FTAs in these regions.”
Engineering exports from India conceded a year-on-year decline for the seventh month in a row in June this year starting from December 2022. The month of June 2023 saw the third straight month of decline and the first double-digit decline in engineering exports during the ongoing fiscal. During June 2023, the decline was higher at 10.99% as against 4.13% in May 2023.
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 25.87% during Jun 2023 and 26.11% during April-June 2023-24.
