India's engineering exports sector witnessed a significant contraction in October 2023, registering a sharp 21% decline compared to the same period last year. The downturn has raised concerns among industry experts and policymakers about the resilience of one of India's key export segments amid global economic headwinds.
Major Markets Show Declining Demand
The United States and ASEAN nations emerged as the primary contributors to this export slump. Shipments to the United States dropped by 11.5% during October, falling to $1.33 billion from $1.5 billion in the corresponding month of the previous year. This decline is particularly noteworthy given that the US has traditionally been one of India's most reliable engineering export markets.
Similarly, exports to ASEAN countries experienced an even steeper fall, declining by 27.3% to $483 million. The performance across other key markets presented a mixed picture, with some regions showing resilience while others followed the downward trend.
Regional Performance Variations
Among the major trading partners, the European Union saw a 7.2% decline in engineering exports, while shipments to North America dropped by 10.8%. The Middle East markets showed relative stability with a marginal 0.4% decrease. However, not all destinations reflected this negative trend.
Exports to the UK surged by an impressive 38.8%, reaching $228.56 million, indicating potential for growth in specific markets. Similarly, shipments to Saudi Arabia grew by 9.7%, demonstrating the selective nature of the current export challenges.
Commodity-wise Performance Analysis
The decline affected most major engineering export commodities, with several key sectors reporting substantial decreases. Industrial machinery and equipment exports fell by 26.6%, while shipments of two and three-wheelers dropped by 32.5%. Auto parts and components also saw a significant contraction of 22.7%.
Other affected sectors included aircraft and spacecraft parts (down 68.5%), electrical machinery (down 19.7%), and railway transportation equipment (down 39.7%). The widespread nature of these declines suggests broader market challenges rather than sector-specific issues.
Cumulative Performance and Future Outlook
For the April-October period of the current fiscal year, cumulative engineering exports reached $61.68 billion, representing a 2.6% decline from the $63.33 billion recorded during the same period in the previous year. This seven-month performance indicates persistent challenges in the global trade environment.
Industry representatives from EEPC India have highlighted multiple factors contributing to this downturn, including global economic slowdown, geopolitical tensions, and inflationary pressures in key markets. The organization continues to monitor the situation closely while advocating for supportive government policies to enhance export competitiveness.
The engineering exports sector, which contributes significantly to India's overall merchandise exports, faces a challenging period ahead. Industry stakeholders are calling for strategic interventions to diversify markets and enhance product competitiveness to navigate the current global trade uncertainties.
