Led by industrial machinery, products of iron and steel and non-ferrous metal items, 30 out of total 33 engineering goods categories recorded impressive growth in exports during May, 2021 with demand from traditional markets remaining robust.
An analysis of trade patterns by Engineering Export Promotion Council (EEPC) of India (EEPC India) showed year-on-year exports decline in the three segments of lead and their products (21 per cent), zinc and products (2 per cent), and ship and boats (16 per cent) during this period.
Among the top 25 key markets for Indian engineering goods, 22 recorded positive growth while China, Indonesia and Saudi Arabia witnessed decline in shipments.
“We have seen impressive growth in exports for the last three months in a row and the order books for the coming months remain strong. While demand has remained subdued in the domestic market, the engineering export sector has made a strong rebound. In order to keep the momentum, India needs to vaccinate most citizens at the earliest,” said EEPC India Chairman Mahesh Desai.
He noted that sustainable economic growth would be key to keep the pace of exports and therefore the government may provide targeted support to the industry.
“Given the prediction of repeated waves of pandemic, industry needs continuous support both from the Central government as well as states,” he added.
Engineering goods have been among the top performers in the export sector and have substantially contributed to the recovery. Not surprisingly, the share of engineering goods in total merchandise exports rose to 25.44 per cent in May from 24.83 per cent in April and 25.36 per cent in March 2021. On a cumulative basis, its share stood at 25.23 per cent during April-May of the current fiscal.
Indian engineering exports continued its upward journey in May following the trend of the last two months. While the figures are lower compared to the previous month it is a silver lining for the Indian economy which has been reeling under Covid-19 crisis.
Engineering goods exports witnessed year-on-year growth for the third straight month to May 2021 and crossed US$ 8 billion for the second month after March 2021. Even compared with May 2019 when economic activities were normal, shipments of engineering items clocked 14.65 per cent growth in May this year.
As before, the US topped as India’s export destination for engineering goods. Shipments to the US jumped 56 per cent to US$ 1,022 million in May, 2021 compared to US$ 655.37 million in the corresponding month last year. On a cumulative basis also, the growth rate was a stellar 144 per cent.
The UAE ranked as India’s second largest export destination registering positive monthly growth of 70 per cent during May 2021 over May 2020 and positive cumulative growth of 79 per cent during April-May 2021 over April-May 2020.
Exports to China slipped to the third position and recorded negative growth during the said period. Shipments to China fell sharply by 35 per cent in May with total exports value pegged at US$ 444.65 million in May 2021 as against US$ 684.51 million in the same month last year.
Among the ASEAN countries under the top 25 engineering exports destinations, Indonesia, Thailand and Vietnam recorded high positive growth while Singapore and Malaysia recorded negative growth during April- May 2021 over April- May 2020.
All the European countries in the top market list such as Germany, Italy, France, the UK, Spain, Poland and Belgium recorded high positive monthly as well as cumulative growth during this period.
Region-wise, the European Union ranked as the numero uno destination with the highest shipment of engineering products from India during April-May 2021. It accounted for 21 per cent of total engineering exports shipped from India.
India’s exports to North America and ASEAN ranked second and third in terms of global shipments of Indian engineering goods during this period with a share of 16.8 per cent and 15.7 per cent respectively.
Among various engineering goods categories, exports of iron and steel recorded a continuous growth to the extent of 43 per cent in May 2021 compared to the same period last year. Exports of products of iron and steel rose 50 per cent in May 2021.
Helped primarily by favourable base, copper and products witnessed 74 per cent growth in exports, shipments of aluminium and products rose 54 per cent, while nickel and tin products grew by more than 120 per cent and 290 per cent respectively in May 2021 over the same month last year.
All the seven panels under industrial machinery exhibited positive growth in May that led the total industrial machinery panel increase by 94 per cent during the month. Electrical machinery and equipment, which is a major engineering exporting sector for India, experienced 20 per cent growth in exports from US$ 647.7 million in May 2020 to US$ 775.3 million in May 2021. Barring three segments all other categories remained in green with impressive numbers.
“The recovery of Indian exports reflects the global trend. We remain optimistic about the demand surge from countries which have traditionally been key markets for Indian engineering goods,” stated Desai.