The Indian engineering goods sector has defied expectations and achieved double-digit growth in September 2023, despite facing stiff competition from cheaper Chinese imports. This surge in exports can be attributed to strategic trade agreements and protective measures implemented by key markets.
UAE and UK Drive Growth:
The recently signed Free Trade Agreement (FTA) with the United Arab Emirates (UAE) has significantly boosted exports to the region. During the April-September period, exports to the UAE surged by 45%, and in September alone, the growth was a remarkable 50%. The UAE has now climbed to the position of the second-largest market for Indian engineering goods.
“The FTA has facilitated the export of auto components, industrial machinery, and equipment to the UAE,” explained Arun Kumar Garodia, Chairman of the Engineering Export Promotion Council (EEPC).
Simultaneously, the United Kingdom’s imposition of anti-dumping duties on Chinese products has provided a level playing field for Indian exporters. Consequently, exports to the UK surged by 22.5% in September.
Other Notable Markets:
Other markets that contributed to the overall growth include France, Mexico, Japan, and Belgium. While exports to France witnessed a staggering 105% growth in September, the overall growth for the April-September period was a more modest 7.4%.
The United States, the largest market for Indian engineering goods, also recorded a healthy 8% growth.
Challenges and Outlook:
However, the sector faces challenges from cheaper Chinese imports, which have pulled down exports of iron and steel, copper, zinc, and aluminium products.
Garodia cautioned that the industry would need to observe the market trends for a few more months to determine whether the recent growth is a temporary blip or a sustainable trend.
Despite these challenges, the Indian engineering goods sector remains optimistic about its future prospects, fueled by strategic trade agreements and supportive government policies.
