NEW DELHI: The US-induced upheaval in world trade through tariffs and counter tariffs has stalled the growth in India’s export of engineering products. The growth in these shipments, which remained in positive territory for nine months in a row bucking the stagnation in other sectors, fell 8.62% on year to $ 9.08 billion in February.
The drag on the exports from the engineering sector were steel, aluminium and copper, special focus sectors for higher tariffs by US President Donald Trump. While the US still discusses the quantum of taxes each country will face under the reciprocal tariff plan, it has already gone ahead with 25% duties on steel and aluminium from March 12. The impact of steel and aluminium duties will be felt in coming months.
There was a 58% year-on-year decline in exports of aluminium and products and a 40% decline in exports of iron and steel in February.
While the US remained the top destination for engineering exports, the impact of tariff announcements was felt in other markets like China and Russia. Engineering goods exports to the US grew 5.8% year-on-year to $1.66 billion while growth in April-February stood at 8.3% to $17.27 billion.
During the April-February overall engineering goods exports stood at $105.85 billion as compared to $98.03 billion in the corresponding period of the previous fiscal.
Engineering exports to China fell 11.9% year-on-year to $207.45 million in February and shipments to Russia also declined during this period. After the US, UAE is the second biggest market for India’s engineering exports followed by Saudi Arabia. Maximum increase in exports was noted in France (67%), UAE (37.9%), and the UK (31.9%).
“The Indian engineering industry is bracing itself for two different impacts in case the higher US tariffs become effective. Firstly, the loss of the US market which is also the largest engineering export destination for India, and secondly, trade diversion that may happen due to this from China, Japan, South Korea, and Southeast Asian nations,” chairman of Engineering Export Promotion Council Pankaj Chadha said.
He stressed the need to diversify export destinations and at the same time also work out an agreement with the US that can lessen the impact of the ongoing tariff war.
“The Government of India is already on the right track in diversifying as it signed new FTAs with UAE, Australia and the EFTA region. New FTAs are also being negotiated with the EU, UK, GCC, and Peru. More such FTAs are required in Latin America and Africa,” he added.
The industry is also hopeful that if the Bilateral Trade Agreement (BTA) with US is implemented it will go a long way in protecting our global markets.
At the same time to protect our market in the US, the Government of India is also contemplating a Bilateral Trade Agreement with the US. This is also a significant step and we are hopeful that if implemented, this would go a long way in protecting our global markets.”
Source: The Financial Express
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