New Delhi: Indian engineering goods exports to Russia and Commonwealth of Independent States (CIS) countries surged in June, up nearly threefold in comparison to a year earlier, according to exporters. However, goods exports to other parts of the world witnessed a slowdown, they added.
The 18-month long Russia-Ukraine war has driven prices of food and fuel higher, resulting in falling demand for goods and services in the West. Consequently, goods exports from India declined for six consecutive months.
While declining engineering exports continued in key markets such as the US, the EU and China in June, shipments to regions such as West Asia and North Africa (WANA), CIS countries and North East Asia saw favourable growth.
“Engineering export to Russia almost tripled in June 2023 and stood at $116.9 million. In cumulative terms, it jumped four-fold in April-June of the current fiscal to $337.4 million compared to $89.7 million in the same period of FY23,” said Engineering Exports Promotion council (EEPC).
According to data available, engineering exports to the US fell 12.5% year-on-year to $ 1.45 billion compared to $ 1.65 billion a year ago. On a cumulative basis, the decline was even sharper with shipments value at $4.30 billion in April-June of 2023-24 as against $5.32 billion in the year earlier.
Engineering exports to the EU fell as much as 16.2% from a year ago in June to $1.51 billion. Cumulatively, it fell nearly 10% to $5.35 billion in the period under consideration.
In June 2023, engineering exports to China declined 20% from a year ago to $184 million.
In comparison, engineering shipments to WANA, CIS and Northeast Asia were up 10.9%, 161.2%, and 0.5%, respectively, in June from a year ago.
Overall, India’s engineering exports declined in June for the third consecutive month in FY24 at $8.53 billion, approximately 11% lower than the year ago. In cumulative terms, too, the decline was around 7.45%.
“The metals sector has been the most significant contributor to the decline due to weakening global demand. The latest news has indicated that global demand for steel weakened further with slow offtake from China’s construction sector,” said EEPC India Chairman Arun Kumar Garodia.
“Similar concerns, including the banking crisis in the US, have affected demand and price of copper, aluminum, lead, and zinc. It is reflected in India’s export performance, indicating a sharp decline in exports to some of India’s major partners, including the US, the EU, and China. The situation is expected to further worsen with the implementation of the CBAM regulations by the EU. The debt crisis has led to declining exports to South Asia, in India’s immediate neighbourhood,” Garodia added.
Barring exports of iron and steel, engineering exports fell 6.95% year-on-year in June, and 2.62% in Q1 FY24. As many as 17 out of 34 engineering segments witnessed positive year-on-year growth in June, while the remaining segments saw a decline in exports. Major engineering products such as iron and steel, products of iron and steel, non-ferrous items such as zinc and tin products barring copper, lead and nickel products, industrial machinery parts, auto components and two and three wheeler parts and tyres, hand tools and railway transport witnessed a decline in exports in June 2023 over a year ago.
Garodia said India’s exports to new FTA partners, the UAE and Australia, increased. More comprehensive bilateral pacts with potential partners will be the right step towards achieving India’s goal of $2 trillion in exports by 2030.
“There is a growing trend of friend-shoring or diversification of trade with political ally. Several firms and economies are considering a China-plus policy. This is an opportunity for India to diversify,” he said.
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 years. In June 2023, the decline was higher at 10.99% as against 4.13% in May 2023.
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