This becomes important as the share of engineering exports in India’s total merchandise exports is around 25%.
“Indian exports of engineering goods to the US declined 7% in December and shipments to China continued a downward trend. In the first nine months of FY23, engineering exports reached 62.86% of the US$127 billion target set by the government for the entire fiscal year,” the EEPC said.
The value of shipments to the US, India’s top market for engineering products, fell 7.3% to $1.58 billion in December 2022 compared with $1.71 billion in December 2021, it said. the advice. Engineering exports to China continued to fall, posting a 47% year-on-year drop to $233.2 million in December 2022 compared to $440.7 million in the same month a year earlier.
During the same period, engineering exports to the European Union (EU) fell 14.3% year-on-year to $1.54 billion.
Despite an FTA with the UAE, shipments to the UAE fell 18.9% in December 2022 to $456.3 million from $562.9 million in December 2021. Overall, engineering exports of India hit the $9 billion mark for the first time after July 2022. However, growth remained negative.
The rate of decline also accelerated to 11.89% year-on-year. An unfavorable base effect, i.e. a surge in shipment of engineering products from India in December 2021, made this decline appear so high.
Engineering exports in December 2022 were recorded at US$9.08 billion compared to US$10.3 billion in December 2021.
Cumulative engineering exports for April-December 2022-23 also posted a 3.03 percent decline over the same period last fiscal year, as they fell to US$79.83 billion from $82.32 billion. in April-December 2021-22.
As many as 23 of the 34 engineering panels experienced positive year-over-year growth in exports during December 2022 compared to the same month in the previous fiscal year. Engineering products such as iron and steel and non-ferrous metals such as copper, aluminum, lead and tin, and other products such as machine tools, two- and three-wheeled vehicles, bicycle parts, automobile tires and hand tools recorded a decrease in exports during December 2022 compared to December 2021.
On a cumulative basis, 21 of the 34 engineering panels posted positive growth during April-December 2022-23 over the same period last fiscal year. The largest decrease was observed in the iron and steel segment, the non-ferrous segment, two- and three-wheeled vehicles, bicycle parts, ships, and project goods.
“The 15 percent export tax on steel continued to weigh on engineering exports. While iron and steel exports were down 53 percent in December 2022 year-on-year, the decline was around 43 percent cumulatively. The recent removal of the export duty on selected steel items is expected to restore iron and steel exports in the coming months,” the council said in a statement.
Excluding the export of iron and steel, engineering exports still registered a year-on-year decrease of 3.79% in December 2022, but experienced growth of 7.8% cumulatively during April-December 2022-23.
Other factors affecting the growth of engineering exports from India include an economic slowdown in some of India’s major export destinations, including China and the EU.
“Some of the recent reports suggest that world trade would remain subdued in the first half of 2023. The S&P Global report has estimated that world trade may decline by 1.9 percent and 1.4 percent in the first half of 2023.” and second quarter of 2023 respectively. However, the same report also indicates that global trade would pick up in the latter part of the year. So there is some positive news for India in the coming months,” said the chairman of EEPC India, Arun Kumar Garodia.
“Until then, there are certain factors India needs to be cautious about: the protective rights structure in the EU, the withdrawal of the EU GSP and the EU Carbon Border Adjustment Mechanism are expected to have some transformative impact. on India’s presence in global supply chains,” he added.
While India is negotiating an FTA with the EU, EEPC has raised these issues with the government.
According to the flash estimates of the Department of Commerce, Government of India, the share of engineering exports in India’s total merchandise exports was 26.34% in December 2022, while for the cumulative exports of engineering during April-December 2022-23, participation was 23.98%. .
During the first nine months of the 2022-23 fiscal year, engineering exports reached 62.86% of the $127 billion target set by the government for the entire fiscal year.