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Mr. Arun Kumar Garodia
Chairman

 As another calendar year comes to its end, it is important to look at the journey of India’s engineering exports. December 2023 has been an overall positive month for the Indian engineering industry despite the significant global difficulties. In December 2023, engineering exports from India grew by almost 10.2 percent over the same period last year. The growth has been an outcome of the rise in shipment of metals, especially iron and steel and copper. Region-wise positive growth was noted in most of India’s traditional partners including EU, Northeast Asia, and ASEAN. The decline in North America also came down significantly to 1 percent. Significant increase in exports was also witnessed in Gulf countries such as Saudi Arabia and UAE and others such as Australia and Russia.

The outcome clearly indicates the efficacy of the two new FTAs India signed with the UAE and Australia. The positive impact of December has also narrowed down the cumulative decline in exports. In April-December 2023, India’s engineering exports came down by only 0.44 percent on a year-on-year basis. In terms of achieving the export target too we are on the right track as we have already reached $80 billion – almost 70 percent of the target of $120 billion set for fiscal 2023-24.

 

This performance has come at a tough time when global trade is undergoing a slump. We are already aware of the fact that global merchandise trade in 2023 declined by almost $2 trillion and the outlook for 2024 remains rather pessimistic as per the UNCTAD trade update. Apart from this, there are a number of other demand side constraints that are also affecting exports from India.

 

First and foremost is the critical Red Sea Crisis that has become a pain point for Indian exporters. Red Sea is a vital route for India's exports to Europe, the US East Coast, the Middle East, and Africa. Therefore the crisis is expected to impact India’s trade with its key global markets. In fact, in our recent meetings, members have mentioned several concerns including a two-to three-fold increase in container shipping rates as well as additional almost 15 days delay in transit time. The exporters are compelled to hold back shipments due to the uncertainty. In summary, the shipping crisis is posing a significant threat to our exporting community, impacting costs, timelines, and administrative processes. Urgent interventions and coordinated efforts are required to alleviate these challenges and support the exporting community.

 

Protectionist policies by some of our key export markets are also a threat to Indian engineering exporters. The recently introduced CBAM or Carbon Border Adjustment Tax which aims to impose emission taxes on specific imports, particularly steel and aluminium, is one example of how such protective measures may impose a significant risk to India's exports in these sectors. EU already has tariff rate quotas on export of steel items from India.

 

Apart from the demand side issue, India’s engineering sector is also facing a number of supply side issues including high cost of raw materials especially metals such as steel, lack of proper quality control, etc. The positive performance of the sector despite these issues is laudable.

 

In our endeavour to assist our exporters on their journey, EEPC India has continued its consultations with the government. We are continually raising our concerns. We are also advising the government in regard to creating new markets by forging comprehensive FTAs in Latin America and Africa, regions which were not much explored yet. We are happy to say that we have also received the guidance and the assistance of the Government of India.

 

Apart from our consultations, EEPC India is also assisting the exporters in exploring new markets and new buyers. In this regard, let me mention that the 11th edition of the largest engineering sourcing show of India, IESS, which is also EEPC India’s flagship show at home, is taking place in Coimbatore, Tamil Nadu between 4 and 6 March 2024. The event is dealing with all engineering product categories and is expected to bring together 300 exhibitors, 400 overseas buyers, and 10,000 trade buyers. The show will have dedicated B2B sessions with the potential business partners, dedicated vendor development programme, global sourcing seminars, and display of new-age technologies. We are hopeful that this edition of IESS would be a success and we cordially invite you to participate wholeheartedly in this exhibition.


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Arun Kumar Garodia