Amid the Covid surge in China and subdued global demand especially from Europe, engineering goods exports recorded a year-on-year decline for the fifth straight month to November 2022 but the pace of decline moderated to a marginal 0.30% due to a lower statistical base.
Engineering goods exports which account for nearly one-fourth of the total merchandise exports fell 0.30% to US$ 8.07 billion in November 2022 as compared to US$ 8.10 billion in the same month a year ago.
Cumulative engineering exports from April-November 2022-23 declined by 1.8% year-on-year to US$ 70.72 billion.
“Since the record post-Covid recovery last fiscal, global demand has again exhibited a downward trend and signs of distress in the current fiscal. Demand continues to remain subdued in the European region primarily due to high energy prices and lower manufacturing activity. This was mainly triggered by the Ukraine-Russia conflict which started last February. China, one of the biggest trading partners of India, continues to grapple with rising Covid cases and a growing real estate crisis leading to low demand,” EEPC India Chairman Arun Kumar Garodia said in a statement.
He further said that there is a growing premonition among the exporting community that the US Central bank’s monetary tightening policy would hit interest-sensitive spending not only in the US but across the world.
“Overall these factors will continue to have a negative impact on demand. The World Trade Organization (WTO) has also said that world trade is expected to lose momentum in the second half of 2022 and may continue to remain subdued in 2023,” said Garodia.
Exports to China continued the downward trend and plummeted 40% in November this year to US$ 263.62 million from US$ 439.63 million in November 2021. Cumulatively, engineering exports to China dropped 58.2% to US$ 1.74 billion in April-November 2022-23 compared to US$ 4.18 billion in the same period of the previous year.
The United States of America (USA) remained the top destination for India’s engineering goods. In November 2022, engineering goods exports to the USA rose 14% year-on-year to US$ 1.47 billion.
On a cumulative basis, engineering exports to the USA during the April-November period of FY23 increased 21.5% year-on-year to US$ 12.85 billion.
Among the 25 key destinations of India’s engineering goods, 15 countries recorded positive growth during November 2022 while the remaining 10 witnessed a year-on-year decline. These 25 countries account for nearly 75% of total engineering exports from India.
As many as 23 out of 34 engineering panels witnessed positive year-on-year growth in exports during November 2022 vis-a-vis the same month last fiscal.
On a cumulative basis, 22 out of 34 engineering panels recorded positive growth from Apr-November 2022-23 over the same period last fiscal. The major decline was witnessed in the iron & steel segment, non-ferrous segment, bicycle parts, ships and boats, and project goods.
The 15% export duty on steel continued to weigh on engineering exports. While exports of iron and steel declined by 56% in November 2022 over November 2021, the decline was around 42% year-on-year from April-November 2022-23.
However, the recent withdrawal of the export duty on selected steel items will likely restore the exports of iron and steel in the coming months. Other factors which affected India’s engineering export growth include a slowdown in economic activities in some of India’s top export destinations including China and the EU.
In the seven months of fiscal 2022-23, engineering exports achieved 55.68% of the US$ 127 billion target set by the Government for the entire fiscal.
As per the quick estimates of the Department of Commerce, Government of India, the share of engineering exports to total merchandise exports from India was 25.23% in November 2022 while for cumulative engineering exports from April-November 2022-23, the share was 23.90%.
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