India's engineering goods exports experienced a significant downturn in October 2025, falling by 16.71 percent compared to the same period last year, according to the Engineering Export Promotion Council of India (EEPC). The exports dropped to $9.37 billion, primarily driven by reduced shipments to the United States and the impact of a high base effect from the previous year.
Major Markets Witness Steep Declines
The United States, which remains India's top destination for engineering goods, saw shipments decline by 14.5 percent to $1.39 billion in October 2025, down from $1.63 billion a year earlier. The EEPC attributed this decline to the combined impact of Section 232 tariffs and reciprocal tariffs imposed by the US administration.
Exports to the ASEAN region witnessed an even more dramatic fall, plunging by almost 50 percent to $1.02 billion. Other key markets also recorded substantial decreases, with shipments to the UAE dropping 19.3 percent to $667 million. Both North America and the European Union, which are India's top two regional markets for engineering goods, experienced year-on-year declines for the second consecutive month.
Sector-Wide Impact Across Product Categories
The downturn affected multiple product categories, with particularly severe contractions in specialized sectors. 'Aircrafts and Spacecraft' and 'Ships, Boats and Floating structures' both fell over 80 percent, according to panel-wise data released by the council.
Other significant categories showing year-on-year declines included:
- Electrical machinery
- Products of iron and steel
- Industrial machinery
- Aluminium products
Overall, 23 out of 34 engineering panels recorded negative growth during October, indicating a broad-based slowdown across the sector.
Industry Response and Government Support
EEPC Chairman Pankaj Chadha commented on the challenging export environment, stating, "While a high base effect was one of the reasons for the drop in exports during October this year, it was also a result of the US-administered reciprocal tariffs. The industry believes that trade diversion due to US tariffs is one of the reasons behind the declining exports."
Chadha welcomed the government's recent initiatives to support exporters, including the approval of over Rs 25,000 crore for the Export Promotion Mission and Rs 20,000 crore for credit guarantee support. These measures are expected to provide much-needed relief to the struggling export sector.
The October decline marks the second monthly setback in fiscal year 2026 after May, ending a four-month streak of growth that had provided some optimism for the sector. According to a Global Trade Research Initiative (GTRI) report, US-bound shipments fell 28.5 percent between May and October 2025 as American duties climbed from 10 percent in April to 50 percent by late August.
Labor-intensive goods, which faced the highest tariffs at 50 percent, experienced a 31.2 percent drop during the same period, highlighting the disproportionate impact on employment-generating sectors.
Despite the October setback, there is some positive news for the engineering export sector. On a cumulative basis during April-October 2025, engineering exports grew 1.68 percent, rising to $68.73 billion from $67.60 billion a year earlier, according to ANI reports.
