Engineering goods exports to China and the European Union fell in August due to demand slowdown while the shipments to the United States rose during the month, the Engineering Export Promotion Council (EEPC) of India said on Saturday.
Continuing the downtrend, engineering goods exports to China nosedived over 70 per cent in August 2022 to $173.7 million as compared to $619.5 million in the same month last year. As per EEPC India analysis, engineering exports to the European Union (EU) fell 27.3 per cent year on year to $1.47 billion.
With the demand from China, the EU, and other key markets slowing down substantially, overall engineering exports in August 2022 dropped by 12.64 per cent to $8.4 billion as compared to $9.6 billion in August 2021.
The 15 per cent export duty on steel continued to weigh on engineering exports as India’s iron and steel exports dropped by 62.2 per cent in August 2022 on a year-on-year basis.
Cumulative engineering export during April-August 2022-23 was recorded at $46.6 billion as against $45.1 billion during the April-August period of 2021-22, managing 3.33 per cent growth.
After a spell of positive year-on-year growth since February 2022, Indian engineering exports for the first time dropped drastically in the month of August 2022.
“The preliminary data indicates that fall in iron and steel exports have been the biggest contributor to this decline – iron and steel exports in the month of August 2022 declined by 62.2 percent over the same period last year. In cumulative terms, the decline was around 37 percent. The 15 percent export duty on certain steel products has seriously daunted India’s export capability in many potential markets including EU countries,” said Mahesh Desai, Chairman, EEPC India.
Desai stated that the industry believes that if the duty continues it will seriously impact our exports, especially at a time when global conflicts are generating new opportunities in many markets.
“The iron and steel sector is already going through several challenges such as the continuation of the EU safeguard on Indian steel and the impending EU GSP withdrawal,” he added.
Amid slowing demand from various markets, the United States (US) continued to register growth and remained the top importer of Indian engineering goods in August 2022.
Engineering shipments to the US grew 14.2 per cent year-on-year in August to $1.58 billion as against $1.39 billion in the same month last year. Cumulative growth during the April-August period was higher by 33.7 per cent.
As per the Quick Estimates of the Ministry of Commerce and Industry, Government of India, the share of engineering in total merchandise exports was recorded at 24.44 per cent in August 2022 while the claim was 24.10 per cent on a cumulative basis.
“Several international agencies have predicted an economic slowdown in the US – the biggest market for Indian iron and steel. In such a scenario, we feel that the government should reconsider the export duty on steel such that the industry can make the most of the opportunities and also at the same time face the global challenges,” EEPC India Chairman said.