India’s engineering exports continued its growth run for the fourth straight month to September 2025 – engineering exports grew by 2.9 percent in September 2025 and 5.3 percent in April-September 2025. While this is a positive step, the growth was moderated when compared to the previous months. The slowdown has been a consequence of the implementation of Section 232 and reciprocal tariffs by the US where exports declined by more than 9 percent in September 2025. As per the industry the 50 percent tariff imposition by the US under Section 232 and reciprocal tariffs has impacted the competitiveness of Indian exporters in the US market – since the tariff implementation, the tariff differential between India and its competitors has increased by an average of 30 percent. This is a cause of genuine concern for the industry as US alone makes up for around 20 percent of our exports. Difficulties are also mounting in another key market for India – EU as EU has reduced the quota of steel imports under TRQ and has increased the erstwhile out-of-quota duty of 25 percent to 50 percent. This has added to the stress of the exporters who are already facing challenges related to CBAM imposition in the EU market. The total engineering exports to EU declined by around 2 percent in September 2025. The loss of crucial markets in US and EU would be critical for Indian exporters. It is therefore imperative that the Government of India negotiates the BTA with USA and the FTA with EU keeping the above concerns in mind.

While many experts have talked about diversification as a way out, a sudden replacement of developed markets with emerging or developing markets is not very viable. Also, often, exporters produce specific/ customised products as per requirements given by the OEMs. It is difficult to diversify markets for such customised products. Therefore diversification strategy should include diversification of markets as well new products and new market strategies. These should be kept in mind while India expands the PTAs with MERCOSUR and Chile and sign new FTAs with Peru, Columbia and even African nations. It is also important to note here, that India’s export performance in the emerging or developing markets has been better in the recent months. In September 2025, while engineering exports to USA and EU dipped, exports to ASEAN, Sub-Saharan Africa, Latin America, Oceania and South Asia increased which may indicate that some diversification is already happening in the markets.

The financial health of Indian engineering exporters is crucial to sustain these trying times. A special support package which can absorb some tariff shocks faced by Indian exporters in the US market, would definitely go a long way to help secure their market share. Also, government may also consider providing some financial support to MSMEs who are affected by CBAM in the EU market.

Affordable finance is crucial for exporters, especially MSMEs, in today’s uncertain global environment. Restoring the Interest Equalisation Scheme would be essential to lower the borrowing cost and increase investment in essential areas such as research and development, technology, etc. RoDTEP is another important step which may address the concern. However the current RoDTEP rates are not sufficient to cover the taxes incurred by exporters during manufacturing. It is heartening to know that the government is in the process of revising the RoDTEP rates, however the new rates should be able to address the above concern. The second generation GST reforms have been a very positive step from the government.

However, in case of engineering some in stances of inverted duty persists which threaten the full efficacy of the reforms. The input tax credit is a way to address this issue although the refund process is slow. To make the reforms more effective there is a need to automate the process such that there is no delays. Finally, past experiences have indicated that organising trade fairs or trade promotion activities in new markets have elicited much better response from buyers. As we promote market diversification, trade promotion becomes a critical part. The MS MEs which contribute significantly to Indian exports are unable to take part in these pro motional activities without any support from the Government. The extension of the Market Access Initiative (MAI) is important to enable organizations like EEPC India to facilitate trade exhibitions, buyer-seller interactions, and other promotional endeavours.

In October, UNCTAD published the Global Trade Update indicating a positive trend of global trade in the first six months of 2025. However, volatilities still exist and Indian ex porters have to ready themselves for any challenges. I firmly believe that with proper support and guidance from the government we will be able to secure a profitable position in global trade.