Trade Trends News
While India's merchandise exports to the rest of the world are slowing down, exports of engineering goods to Russia and other CIS countries have surged, nearly tripling from June last year, exporters said.
The Russia-Ukraine war, now in its 18th month, has led to a spike in food and fuel prices while causing a slump in Western demand for goods and services. India's merchandise exports have now declined for six consecutive months.
India's engineering exports to many of its major markets, especially the US, EU and China, continue to show a declining trend in June 2023, while exports to West Asia North Africa (WANA), North East Asia and CIS countries recorded positive growth during this period.
Engineering exports to Russia almost tripled to $116.9 million in June 2023," the Engineering Export Promotion Council (EEPC) said. Cumulative exports quadrupled to $337.4 million during April-June period of the current fiscal year from $89.7 million during the same period of FY2023."
The latest figures show that engineering exports to the US fell 12.5% to $1.45 billion from $1.65 billion in the same month last year. On a cumulative basis, the decline was even more dramatic, with total shipments for the April-June 2023-24 period at $4.3 billion, compared to $5.32 billion for the same period last year.
Engineering exports to the European Union (EU) declined by 16.2% year-on-year to $1.51 billion in June 2023. cumulatively, exports declined by nearly 10% to $5.35 billion in April-June 2024 fiscal year.
Engineering exports to China declined by 20% year-on-year to $184 million in June 2023. engineering shipments to WANA, CIS and Northeast Asia grew by 10.9%, 161.2% and 0.5% from June 2022 to June 2023, respectively.
Overall, India's engineering exports declined for the third consecutive month in June. Its revenue stood at $8.53 billion, down about 11% from the same month in the previous fiscal year. The cumulative decline was about 7.45%.
Arun Kumar Garodia, Chairman of EEPC India, said, "The metal sector is the most important factor for the decline. This is a result of weak global demand. The latest news suggests that global steel demand has weakened further as purchases from the Chinese construction sector have slowed down."
Garodia added, "Similar concerns including the banking crisis in the US have also impacted the demand and prices of copper, aluminum, lead and zinc. This was also reflected in India's export performance, indicating a sharp decline in exports to some of India's key partners, including the US, EU countries and China. The situation is expected to deteriorate further with the implementation of the CBAM regulation in the EU. The debt crisis has also led to a decline in exports to India's immediate neighbors in South Asia."
Excluding steel exports, engineering exports declined by 6.95% year-on-year in June 2023 and by 2.62% in April-June 2023, which shows that steel has played a dragging role in the decline in 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 export growth.In June 2023 as compared to June 2022, major engineering products such as iron and steel, iron and steel products, most non-ferrous metal products (including zinc and tin products (except copper, nickel and lead products)), industrial machinery and parts, two-wheelers and three-wheelers, automobile parts and components, automobile tires, railroad transport and hand tools exports declined.
Elaborating on the trend in engineering exports, EEPC India Chairman Garodia said that India's exports to NFTA partners UAE and Australia have increased since the signing of the trade pact, and hence a more comprehensive FTA with potential partners would be the right step for India to achieve its target of $2 trillion in exports by 2030.
He noted, "Globally, there is a growing trend of 'friendlies', which indicates diversification of trade towards political alliances. Moreover, in the wake of the New Crown pandemic, a number of companies and economies are considering a 'China Plus' policy. This is an opportunity for India to diversify into non-traditional markets, especially in Africa and Latin America. This can be achieved by pursuing comprehensive free trade agreements in these regions."
India's engineering exports declined year-on-year for the seventh consecutive month in June.June also marked the third consecutive month of decline in engineering exports and the first double-digit decline in engineering exports in the current fiscal.June saw a decline of 10.99% as compared to a decline of 4.13% in May.
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