Engineering exports recorded around 3.3% cumulative growth year-on-year during the first five months of fiscal 2024-25

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October-2024 engineering exports hit peak growth for fiscal 2024-2025

Indian engineering exports continued its growth run for the sixth straight month to October 2024 and this time the growth was at an unprecedented high of 38.5 perecnt over Oct 2023 driven by exceptionally high growth in exports of Aircraft, spacecraft and parts; and Ships, boats and floating structures. For the first time in fiscal 2024-25, Indian engineering exprts crossed USD 10 billion mark and stood at its highest of this fiscal. Exports of Iron and steel turned positive for the first time in fiscal 2024-25 while Electric machinery, Industrial machinery and automobile also supported this high growth of overall engineering exports by showing noticeable increase in exports.Cumulative exports during Apr-Oct 2024-25 also recorded 8.27 percent growth over the same period last fiscal. Share of engineering in overall merchandise exports was at an impressive 28.72 percent in October 2024 and at 26.75 percent on a cumulative basis.

Trade Flow Export figures(in $ billion) Growth (%)
Oct-2023 Oct-2024 Apr-Oct 2023-24 Apr-Oct 2024-25 Oct-2024 over Oct-2023 Apr-Oct 2023-24 over Apr-Oct 2024-25
Engineering exports 8.08 11.19 61.50 66.59 38.53% 8.27%
Overall merchandise exports 33.43 39.20 244.51 252.28 17.23% 3.18%
Share of engineering (%) 24.16% 28.72% 25.15% 26.75% --- ---
Service Exports 28.05 34.02/td> 191.97 215.98 21.28% 12.51%

Source : Compiled from data by DGCI&S and Quick Estimates published by the Government of India

Overall Engineering Exports vs Engineering Exports Excluding Steel Segment (Values in USD Million)

Excluding the export of iron and steel, engineering exports recorded a higher growth both on a monthly as well as cumulative basis as shown in the table above. Exports of Iron and Steel however secured 29.4 percent year-on-year growth in October 2024 but contimued to decline on a cumulative basis and dropped by 20.91 percent year-on-year during April-October 2024-25.

Trade Flow Export in Oct-2023 Export in Oct-2024 Growth (%) Exports in Apr-Oct 2023-24 Exports in Apr-Oct 2024-25 Growth (%)
Overall engineering exports 8078.48 11190.84 38.53 61499.68 66585.89 8.27
Engineering exports excluding Iron and Steel 7439.92 10364.23 39.31 54629.95 61152.46 11.94

Source : DGCI&S, Govt. of India


Engineering Exports: Monthly Trend

The monthly engineering figures for 2024-25 vis-à-vis 2023-24 are shown below as per the latest DGCI&S estimates:

Table 1: Engineering Exports: Monthly Trend in 2024-25

US$ million

Month 2023-24 2024-25 Growth (%)
April 8949.36 8366.65 -6.51
May 9300.62 9818 5.56
June 8515.72 9193.63 7.96
April-June 26765.71 27378.28 2.29
July 8720.3 8959.5 2.74
August 9048.65 9332.19 3.13
September 8886.54 9725.08 9.44
July-September 26655.49 28016.78 5.11
October 8078.48 11190.84 38.53
April-October 61499.68 66585.89 8.27

Source : DGCIS, Govt. of India

TOP 25 ENGINEERING EXPORT DESTINATIONS IN April-October 2024-25

We now look at the export scenario of the top 25 nations that had highest demand for Indian engineering products during October 2024 over October 2023 as well as in cumulative terms during April-October 2024-25 vis-à-vis April-October 2023-24. The data clearly shows that top 25 countries contribute 75.8% of total engineering exports.

Table 2: Engineering exports country wise

(US$ million)

Countries Oct-2023 Oct-2024 Growth (%) April-October 2023-24 April-October 2024-25 Growth (%)
U S A 1435.97 1551.56 8.05% 8734.23 9278.41 6.23%
U ARAB EMTS 448.36 672.13 49.91% 2695.4 3902.86 44.8%
SAUDI ARAB 455.84 388.7 -14.73% 2208.08 2613.55 18.36%
FRANCE 186.8 384.51 105.84% 1075.47 1155.04 7.4%
GERMANY 336.18 361.21 7.44% 2089.78 2087.09 -0.13%
U K 265.26 324.96 22.51% 1815.85 1942.28 6.96%
MEXICO 214.83 300.88 40.06% 1583.54 1892.07 19.48%
SINGAPORE 348.31 288.49 -17.18% 1705.92 1960.99 14.95%
SOUTH AFRICA 202.92 277.86 36.93% 1152.07 1172.39 1.76%
CHINA P RP 260.24 264.2 1.52% 1228.6 1342.8 9.3%
JAPAN 170.09 256.99 51.09% 888.43 1165 31.13%
ITALY 224.78 202.48 -9.92% 1962.85 1487.76 -24.2%
TURKEY 272.59 199.7 -26.74% 1453.33 1663.02 14.43%
NEPAL 175.36 198.94 13.44% 1175.27 1095.67 -6.77%
KOREA RP 174.53 192.73 10.43% 1400.15 1286.41 -8.12%
BRAZIL 149.02 192.58 29.23% 1004.32 1097.55 9.28%
THAILAND 162.53 179.65 10.54% 914.08 998.35 9.22%
BANGLADESH PR 169.72 175.95 3.67% 1136.18 1024.23 -9.85%
OMAN 39.93 174.57 337.25% 422.9 465.62 10.1%
NETHERLAND 163.97 151.46 -7.63% 1038.29 946.29 -8.86%
SPAIN 93.86 150.29 60.12% 787.52 694.47 -11.82%
INDONESIA 285.71 142.98 -49.96% 1577.59 1087.75 -31.05%
BELGIUM 117.03 138.35 18.22% 816.13 714.15 -12.5%
VIETNAM SOC REP 108.12 121.55 12.42% 577.96 698.32 20.82%
MALAYSIA 178.31 114.61 -35.73% 911.4 724.68 -20.49%
Total engineering exports to top 25 countries 6640.28 7407.33 11.55% 40355.33 42496.75 5.31%
Total engineering exports 8886.54 9824.33 10.55% 53421.2 56226.95 5.25%

Source : DGCI&S

REGION WISE INDIA’S ENGINEERING EXPORTS

The following table depicts region wise India’s engineering exports for April-October 2024 as compared to April-October 2023.

Table 3: Region wise engineering exports in April-February 2023-2024 vis-à-vis April-October 2023-2024

(US$ million)

Regions Oct-2023 Oct-2024 Growth (%) April-October 2023-24 April-October 2024-25 Growth (%)
NORTH AMERICA 1741.02 1949.7 11.99% 10901.79 11778.35 8.04%
EUROPEAN UNION 1488.12 1910.94 28.41% 10081.31 9701.71 -3.77%
WANA 1271.12 1614.29 27% 7339.05 9108.04 24.1%
ASEAN 1146.77 907.82 -20.84% 6104.7 5979.61 -2.05%
SSA( Sub Saharan Africa) 696.39 794.8 14.13% 4037.47 3947.24 -2.23%
N E ASIA 683.21 770.41 12.76% 3987.81 4277.14 7.26%
OTHER EUROPE 572.12 556.49 -2.73% 3459.47 3843.53 11.1%
SOUTH ASIA 543.35 521.49 -4.02% 2999.9 3040.34 1.35%
LATIN AMERICA 502.66 510 1.46% 2927.36 2927.19 -0.01%
CIS 120.11 164.24 36.74% 810.96 919.09 13.33%
OCEANIA 119.47 118.61 -0.72% 758.73 689.03 -9.19%
OTHERS 2.2 5.54 151.79% 12.65 15.69 23.96%

Note : *Figures have been rounded off.

Source : DGCI&S **Myanmar has been included in ASEAN and not in South Asia, since ASEAN is a formal economic grouping.

PRODUCT PANEL WISE ENGINEERING EXPORTS

In this section we look at the Engineering Panel wise exports for the month of October 2024 vis-à-vis October 2023 as well as the cumulative exports for April-October 2024-25 vis-à-vis April-October 2023-24. These are indicated in the tables below.

Table 4a. Trend in exports of iron and steel and its products

(US$ million)

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
IRON AND STEEL 755.3 739.61 -2.08% 6231.17 4606.82 -26.07%
PRODUCTS OF IRON AND STEEL 849.17 827.52 -2.55% 4885.05 4806.84 -1.6%
Sub Total 1604.47 1567.13 -2% 11116.23 9413.66 -15%

Source : DGCI&S

Table 4b. Trend in exports of Non-Ferrous Metals and Products

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
Aluminium and products made of Aluminium 565.01 526.17 -6.87% 3618.22 3249.18 -10.2%
Copper and products made of copper 271.08 246.66 -9.01% 1187.07 1053.17 -11.28%
Lead and products made of Lead 76.25 64.4 -15.53% 308.18 421.53 36.78%
Nickel and products made of Nickel 14.08 15.15 7.61% 87.33 87.68 0.4%
Other Non Ferrous Metals and their products 62.38 78.46 25.78% 367.85 424.1 15.29%
Tin and products made of Tin 1.44 2.95 105.3% 7.97 11.3 41.72%
Zinc and products made of zinc 41.47 58 39.87% 390.18 347.34 -10.98%
Sub Total 1031.71 991.8 -4% 5966.8 5594.3 -6%

Source : DGCI&S

Table 4c. Trend in exports of Industrial Machinery

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
Air condition and Refrigeration Machinery and Parts, Industrial Furnaces, Water heaters and Centrifuges and Compressor 145.11 170.43 17.44% 831.31 909.39 9.39%
IC Engines and Parts 316.39 324.03 2.41% 1852.05 1844.39 -0.41%
Industrial Machinery for dairy, agriculture, food processing, textiles, paper, chemicals, etc 672.49 701.88 4.37% 3976.53 4066.78 2.27%
Machine Tools 58.61 61.09 4.22% 365.14 392.75 7.56%
Machinery for ATMs, Injecting Moulding machinery, valves, etc 202.41 240.9 19.02% 1232.08 1361.01 10.46%
Nuclear Reactors, Industrial Boilers and Parts 65.01 89.15 37.13% 368.08 406.76 10.51%
Pumps of all types 110.14 136.23 23.68% 704.58 759.17 7.75%
Sub Total 1570.18 1723.71 9.78% 9329.77 9740.25 4.4%

Source : DGCI&S

Table 4d. Trend in exports of Electrical Machinery and Equipment

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
Electric Machinery and Equipment 1054.87 1281.13 21.45% 6203.2 6975.32 12.45%

Source : DGCI&S

Table 4e. Trend in exports of Auto and auto parts

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
AUTO COMPONENTS/PARTS 642.025 688.684 7.27% 3768.568 4089.741 8.52%
AUTO TYRES AND TUBES 226.942 256.807 13.16% 1366.722 1511.515 10.59%
Motor Vehicle/cars 762.562 788.897 3.45% 4270.925 4397.943 2.97%
Two and Three Wheelers 203.818 266.174 30.59% 1313.806 1545.374 17.63%
Sub Total 1835.348 2000.562 9% 10720.022 11544.573 7.69%

Source : DGCI&S

Table 4f. Trend in exports of aircraft, spacecraft and parts and ships, boats and floating structures

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
Aircrafts, Spacecrafts and Parts 104.55 710.58 579.68% 676.7 2970.85 2741.64%
Ships, Boats and Floating Structures 467 169.72 -63.66% 2165.62 2171.11 364.9%
Sub Total 571.55 880.3 54.02% 2842.32 5141.96 80.91%

Source : DGCI&S

Table 4g. Trend in exports of other engineering products

US$ Million

Product panels October-2023 October-2024 Growth April-October 2023-24 April-October 2024-25 Growth
BICYCLE AND PARTS 30.53 32.67 7.02% 183.02 186.37 1.83%
Hand Tools, Cutting Tools and Implements made of Metals 80.06 89.18 11.4% 464.13 503.06 8.39%
Medical and Scientific Instruments 190.03 257.74 35.63% 1190.48 1337.69 12.37%
OFFICE EQUIPMENTS 19.43 22.26 14.59% 165.96 140.73 -15.2%
OTHER CONSTRUCTION MACHINERY 250.82 268.78 7.16% 1444.14 1526.76 5.72%
OTHER MISC. ITEMS 387.34 434.19 12.1% 2325.1 2515.18 8.18%
PRIME MICA AND MICA PRODUCTS 4.73 2.57 -45.77% 20.76 14.96 -27.92%
Railway Transport and Parts 23.35 22.23 -4.81% 148.78 153.67 3.29%
PROJECT GOODS 0.2 0.25 27.06% 1.95 1.15 -41.33%
OTHR RUBBER PRODCT EXCPT FOOTW 134.61 142.57 5.92% 821.13 875.15 6.58%

Source : DGCI&S

ENGINEERING PRODUCT PANELS – COUNTRY-WISE ANALYSIS

Reasons for Decline (As per April-Septepber 2024-25):

  • Iron and Steel and Products of Iron and Steel: - Insights: 

a)During April-October 2024-25, India’s exports of Iron and Steel deteriorated by 21% vis-à-vis same period last fiscal, while Products of Iron and Steel witnessed growth to the extent of 1% during the same period, after continuous decline for many months.

b)Indian steel HRC exports remained sluggish this week as global market sentiments weakened further. Indian offers to the Middle East (ME) remained largely stable amid competitive quotes from China. Furthermore, a recent deal between China and the Middle East further pressured Indian exports. In contrast, European offers continue to be affected by weak regional demand.

c)India’s HRC offer to Middle East: Indian HRC export prices to the Middle East (ME) continued to remain stable for the week at $560/t CFR, as per sources. Chinese HRC export prices to the Middle East fell by $10/t w-o-w to $520-525/t CFR UAE against $530-535/t CFR UAE last week amid active trade.

d)India’s HRC offer to EU: India's HRC export offers to Europe (S275, 3mm) continued to remain range-bounded at $590-595/t CFR Antwerp ($540-545/t FOB, east coast India). Indian steel mills' export offers failed to gain traction in the European market due to high prices relative to domestic rates and EU trade restrictions. The unfavourable US dollar-euro exchange rate further increased import costs. In the EU, domestic HRC prices remained flat amid sluggish trading, with market participants uncertain about the market's direction for Q1CY'25.

e)Overall outlook: Chinese steelmakers continue to be highly competitive, offering lower prices and actively seeking export markets. This poses a significant challenge for Indian exporters. The global economic outlook remains sluggish, with geopolitical tensions contributing to concerns about overall steel demand and potential impacts on Indian exports.

  • Non- Ferrous Sector (Copper, Aluminium, Zinc) 
  • Copper: (decline of 6% in April-October 2024) 

a)Copper exports have increased in October 2024 by 26%. If this trend continues, we will see a revival in copper exports for the fiscal 2024-25

b)The 6% decline in cumulative terms can be attributed to the declineing copper exports in the previous months

c)The decline was a result of

       
  • global price volatility: In September global copper prices showed volatility –trended downwards in the beginning of September 2024 before gaining on growing anticipation of a rate cut by the US Federal Reserve which was came through on 18 September
  •    
  • Increase in domestic demand especially the EV sector: The Ministry of Mines projects that the demand for copper in India, particularly from the EV sector, will increase by 1.7 million tonnes by 2027. The per capita copper consumption in India is also expected to rise from the current level of 0.6 kg to 1 kg in the coming years.
  •    
  • Closure of Vedanta's Sterlite copper plant
  • Aluminium (decline of 7% in April-October 2024)

a) Aluminium exports have increased in October 2024 by 17%. If this trend continues, we will see a revival in Aluminium exports for the fiscal 2024-25

The 7% decline in cumulative terms can be attributed to the declineing Aluminium exports in the previous months

The decline was a result of

       
  • Restrictive trade policies and geopolitical tensions including Section 232 and U.S. Tariffs, U.S. Anti-Dumping Duties on Aluminium Extrusion Products
  •    
  • The Indian aluminium exports also face discrimination in market access in ASEAN countries and even our neighbouring markets: In the ASEAN region, countries like Malaysia have imposed high Most Favoured Nation (MFN) duties ranging from 25% to 30% on tariff lines between 7604 to 7608, severely limiting exports from India’s downstream aluminium industry, which predominantly comprises MSMEs. Similarly, Indonesia has placed downstream aluminium products under the Sensitive Track, further restricting market access.

    India’s aluminium exports also face discriminatory practices in neighbouring countries such as Bangladesh. In April 2023, Bangladesh reclassified aluminium billets under HS code 76012090 to 76012000, removing them from the South Asian Free Trade Area (SAFTA) agreement and imposing a 5% Basic Customs Duty (BCD) on imports from India. This change has increased the cost of exporting aluminium billets to Bangladesh, affecting trade volumes.

  •    
  • Fluctuation in global aluminium prices
  •    
  • Rising domestic demand
  • Zinc(decline of 5% in April-October 2024)

Zinc exports have increased in October 2024 by 31%. If this trend continues, we will see a revival in zinc exports for the fiscal 2024-25. The culuative decline can be attributed mainly to the rising demand for Zinc in the domestic market.

Table 5: Export of Different Panels

(US$ million)

Product panels Top 5 nations April-October 2023-24 April-October 2024-25 Growth (%)
Iron and Steel and Products made of Iron and Steel
U S A 1646.41 1647.12 0%
ITALY 1091.3 715.44 -34%
U ARAB EMTS 633.8 670.92 6%
U K 387.43 445.12 15%
NEPAL 546.61 406.81 -26%
Non-Ferrous Metals and Products made of Non-Ferrous Metals
U S A 724.91 710.06 -2%
KOREA RP 647.79 473.42 -27%
TURKEY 121.8 408.55 235%
SAUDI ARAB 545.14 345.23 -37%
CHINA P RP 205.52 305.09 48%
Industrial Machinery
U S A 1848.45 2045 11%
GERMANY 520.42 463.09 -11%
U ARAB EMTS 379.13 448.43 18%
CHINA P RP 360.89 424.66 18%
THAILAND 405.5 391.72 -3%
Electrical Machinery
U S A 1223.51 1352.57 11%
SINGAPORE 523.28 787.66 51%
U K 499.87 531.65 6%
GERMANY 366.32 430.08 17%
KOREA RP 200.88 361.41 80%
Automobiles
U S A 1199.15 1200.63 0%
MEXICO 794.9 991.25 25%
SAUDI ARAB 828.84 836.88 1%
SOUTH AFRICA 745.55 767.42 3%
U ARAB EMTS 414.58 524.69 27%
Aircrafts and Spacecraft parts and products
U ARAB EMTS 9.26 697.11 7429%
SAUDI ARAB 1.04 352.52 33656%
FRANCE 87.7 326.27 272%
U S A 227.52 214 -6%
TURKEY 44.92 189.94 323%
Ships Boats and Floating products and parts
U ARAB EMTS 485.69 737.63 52%
SINGAPORE 606.36 591.36 -2%
U S A 52.6 250.35 376%
INDONESIA 556.18 232.68 -58%
SRI LANKA DSR 175.32 104.62 -40%
Project Goods
KAZAKHSTAN 0 0.35 N/A
U S A 0.12 0.31 148%
BHUTAN 0.02 0.12 489%
CONGO P REP 0 0.06 N/A
NEPAL 0.03 0.05 56%
Other Rubber Product Except Footwear
U S A 183.26 201.72 10%
GERMANY 60.4 56.67 -6%
U ARAB EMTS 28.75 37.01 29%
CHINA P RP 29.25 31.64 8%
NETHERLAND 24.09 31.44 31%
Other engineering products
U S A 1424.47 1454.93 2%
GERMANY 287.88 315.63 10%
U K 294.3 311.08 6%
U ARAB EMTS 259.23 283.45 9%
SAUDI ARAB 203.43 212.25 4%

Source : DGCI&S

ENGINEERING EXPORTS – STATE-WISE ANALYSIS

State wise engineering export performance

The table below indicates the exports from top Indian states. It is evident from the table that almost 93.7 % of India’s exports is contributed by the listed 12 states. Within this almost 56.1 percent of exports is done by Maharashtra, Tamil Nadu and Gujarat together.

Table 6: Top state wise engineering export performance - April-September 2024-25

(US$ million)

Top States Cumulative Export April-September 2024-25 Share % Remark
Maharashtra 11155 22.89% 93.7% share covered by top 12 states
Tamil Nadu 8702.65 17.86%
Gujarat 7497.04 15.39%
Karnataka 3439.74 7.06%
Telangana 3228.76 6.63%
Odisha 2812.3 5.77%
Andhra Pradesh 2542.49 5.22%
Uttar Pradesh 2147.93 4.41%
West Bengal 1682.27 3.45%
Madhya Pradesh 942.22 1.93%
Rajasthan 757.42 1.55%
Haryana 749.12 1.54%
Daman & Diu And Dadra & Nagar Haveli 597.66 1.23%
Delhi 507.99 1.04%
Kerala 427.42 0.88%
Chhattisgarh 414.43 0.85%
Jharkhand 390.97 0.8%
Punjab 328.17 0.67%
Goa 184.65 0.38%
Puducherry 94.63 0.19%
Uttarakhand 42.67 0.09%
Bihar 33.49 0.07%
Himachal Pradesh 12.09 0.02%
Tripura 10.94 0.02%
Assam 9.57 0.02%
Chandigarh 7.61 0.02%
Arunachal Pradesh 1.61 0%
Jammu & Kashmir 1.27 0%
Manipur 0.56 0%
Sikkim 0.53 0%
Meghalaya 0.09 0%
Andaman & Nicobar 0.08 0%
Lakshadweep 0.06 0%
Nagaland 0 0%
Ladakh 0 0%
Mizoram 0 0%

Source : DGCI&S

Region wise engineering exports

In terms of region, western region which includes industrial states like Maharashtra and Gujarat is the front runner in terms of exports with 38.3 percent share. Tamil Nadu from the Southern Region has retained its export performance and it ranked second after Maharashtra, while Gujarat and Karnataka ranked third and fourth during April-September 2024-25.

Note : DGCI&S state wise data available till February-2024

Table 7: Region wise exports from India till February-2024

Value in US$ million

Region Oct-2023($Mn) Oct-2024($Mn) Growth % Apr-Oct 2023-24($Mn) Apr-Oct 2024-25 ($Mn) Growth %
WESTERN REGION 3235.41 3477.85 7.49% 20242.16 20376.57 0.66%
SOUTHERN REGION 3025.34 3323.9 9.87% 15987.11 18435.75 15.32%
EASTERN REGION 893.46 906.48 1.46% 6117.73 5356.31 -12.45%
NORTHERN REGION 1764.21 588.86 -66.62% 11187.05 4554.8 -59.29%
Grand Total 8918.42 8297.09 -6.97% 53534.05 48723.43 -8.99%

CORRELATION BETWEEN MANUFACTURING PRODUCTION AND ENGINEERING EXPORTS

Engineering forms a considerable part of the broader manufacturing sector and the share of engineering production in overall manufacturing output is quite significant. As exports generally come from what is produced within a country, some correlation between manufacturing production growth and engineering export growth should exist. We briefly look at the trend in manufacturing growth as also engineering export growth to see if they move in tandem. It may be mentioned that manufacturing has 77.63% weightage in India’s industrial production.

Engineering export growth and manufacturing output growth moved in the same direction in as many as nine out of twelve months in each of the fiscal years 2019-20 and 2020-21. During fiscal 2021-22, engineering export growth and manufacturing growth moved in the same direction in seven out of twelve months while in each of fiscal 2022-23 and 2023-24, as many as 10 out of 12 months saw engineering exports and manufacturing output moved in the same direction.

The first two month of fiscal 2024-25 also saw manufacturing output growth and engineering exports growth moving in the same direction. April 2024 saw engineering exports declined from a growth in Mar 2024 and manufacturing output growth decelerated. The month of May 2024 witnessed just the opposite. Engineering exports bounced back to growth path and manufacturing output growth accelerated. Then June, July and August 2024 however saw both moved in the opposite direction. June and August 2024 saw higher engineering export growth but lower manufacturing growth in comparison to the previous month while July 2024 just witnessed the reverse. September 2024 again saw both moving in the same direction by securing higher growth.

The link between these two may not be established on a monthly basis, but a positive correlation may be seen if medium to long term trend is considered.

Table 8: Engineering exports growth vis-à-vis manufacturing growth from April 2020
Months/ Year Engg. Export Growth (%) Manufacturing Growth (%)
April 2020 -63.05 -66.6
May 2020 -22.17 -37.8
June 2020 -5.18 -17.0
July 2020 10.56 -11.4
August 2020 -7.01 -7.6
September 2020 4.09 0.4
October 2020 -5.01 4.5
November 2020 -8.37 -1.6
December 2020 -0.93 2.7
January 2021 16.66 -0.9
February 2021 -4.94 -3.4
March 2021 67.75 28.3
April 2021 236.85 196.0
May 2021 50.21 32.1
June 2021 51.00 13.2
July 2021 42.57 10.5
August 2021 58.63 11.1
September 2021 35.11 4.3
October 2021 51.76 3.3
November 2021 37.28 0.3
December 2021 47.42 0.6
January 2022 25.63 1.9
February 2022 35.49 0.2
March 2022 19.72 1.4
April 2022 18.30 5.6
May 2022 11.45 20.6
June 2022 3.01 13.0
July 2022 -0.03 3.2
August 2022 -12.64 -0.5
September 2022 -11.39 2.0
October 2022 -19.68 -5.8
November 2022 0.09 6.7
December 2022 -11.60 3.6
January 2023 -9.76 4.0
February 2023 -9.73 5.6
March 2023 -7.49 0.5
April 2023 -7.27 5.5
May 2023 -4.13 6.3
June 2023 -10.94 3.5
July 2023 -6.65 5.0
August 2023 7.83 9.3
September 2023 6.81 4.5
October 2023 7.20 N A
November 2023 -3.48 1.2
December 2023 9.82 4.5
January 2024 4.21 3.6
February 2024 15.9 5.0
March 2024 10.66 N A
April 2024 -4.49 3.9
May 2024 7.41 4.6
June 2024 10.27 N A
July 2024 3.66 4.6
August 2024 4.26 1.0
September 2024 9.44 3.9

Source :Department of Commerce and CSO

IMPACT OF EXCHANGE RATE ON INDIA’S EXPORTS

How did the exchange rate fare during October 2024 and what was the recent trend in ReDollar movement? In order to get a clearer picture of the recent Re-Dollar trend, not only we took the exchange rate of October 2024, but also considered monthly average exchange rate of Rupee vis-à-vis the US Dollar for each month of fiscal 2023-24 and 2024-25 till October 2024 as per the latest data published, as mere one-month figure does not reflect any trend. The following two tables clearly depicts the short-term trend:

 

Fig 3: Trend of Rupee vis-a-vis US dollar from April 2020

(Monthly Average Rate of FBIL has been considered)

Source : FBIL

Table 9: USD-INR monthly average exchange rate in 2024-25 vis-à-vis 2023-24

(As per latest data released by FBIL)

Monthly Average Exchange Rate (1 USD to INR) Year-on-Year Change (%) Direction Month-on-Month Change (%) Direction
Month 2023-24 2024-25
April 82.02 83.41 1.69 Depreciation 0.49 Depreciation
May 82.34 83.39 1.28 Depreciation -0.02 Appreciation
June 82.23 83.47 1.51 Depreciation 0.10 Depreciation
July 82.15 83.59 1.75 Depreciation 0.14 Depreciation
August 82.79 83.89 1.33 Depreciation 0.36 Depreciation
September 83.05 83.81 0.92 Depreciation -0.10 Depreciation
October 83.24 84.02 0.94 Depreciation 0.25 Depreciation

Rupee depreciation vis-à-vis the US Dollar continued in the new fiscal 2024-25 on a yearon-year basis and again depreciated on a month-on-month basis in October 2024. Rupee remained under pressure through most of the month due to appreciation of USD over the month, coupled with equity outflows by foreign portfolio investors from Indian stock market and strong dollar demand from local importers. Geopolitical tensions in the Middle East, and worries over recession in the US also weighed on rupee. US dollar strengthened due to rising uncertainties around just concluded US presidential election, along with a reduced likelihood of interest rate cuts by the Federal Reserve.

Table 10: USD-INR monthly average exchange rate in 2023-24 vis-à-vis 2022-23

(As per latest data released by FBIL)

Monthly Average Exchange Rate (1 USD to INR) Year-on-Year Change (%) Direction Month-on-Month Change (%) Direction
Month 2022-23 2023-24
Apr 76.17 82.02 7.68 Depreciation -0.33 Appreciation
May 77.32 82.34 6.49 Depreciation 0.39 Depreciation
Jun 78.04 82.23 5.37 Depreciation -0.13 Appreciation
Jul 79.60 82.15 3.20 Depreciation -0.10 Appreciation
Aug 80.23 83.04 3.50 Depreciation 0.78 Depreciation
Sep 80.23 83.04 3.50 Depreciation 0.30 Depreciation
Oct 82.34 83.24 1.09 Depreciation 0.24 Depreciation
Nov 81.81 83.30 1.82 Depreciation 0.07 Depreciation
Dec 82.46 83.28 0.99 Depreciation -0.02 Appreciation
Jan 81.90 83.12 1.49 Depreciation -0.19 Appreciation
Feb 82.61 82.96 0.42 Depreciation -0.19 Appreciation
Mar 82.29 83.00 0.86 Depreciation 0.05 Depreciation

Source : FBIL, EEPC Research

TREND IN ENGINEERING TRADE BALANCE

We now present the trend in two-way yearly trade for the engineering sector for the 2024-25 depicted in the table below:

Table 11: Monthly Trend in Engineering Trade Balance for the current FY

(US$ million)

Trade Flow Apr May June July August September October
Engineering Export 11034.8 10.0 9.4 9.0 9.4 9.8 11.2
Engineering Import 10985.6 12.9 12.0 12.5 14.1 12.7 13.4
Trade Balance -0.4 -2.9 -2.6 -3.5 -4.7 -2.9 -2.2

Source : DGCI&S

TO CONCLUDE...

The Indian engineering exports recorded another remarkable performance for the 6th month in the current fiscal with a Y-o-Y growth of 38.5% in October 2024 and 8.2% in April-October 2024. It needs to be mentioned here that after a considerable number of months, October 2024 also recorded positive growth in exports of ferrous and non-ferrous metals including iron and steel, copper, aluminium and zinc which otherwise recorded negative growth in the previous months. This performance despite the growing global uncertainties and shifting trade policies is commendable.

In its latest Global Trade Outlook and Statistics (October 2024), WTO revised its forecast for global merchandise trade for 2024 to 2.7% which is slightly better than the previous 2.6%. The update for 2025 however is revised down to 3% from the previous 3.3%. The growth is trade will be mainly contributed by the rising demand in ASEAN countries rather than the West. The WTO further mentions the current trade trend has indicated rising trade volume and flate trade values – an incation towards decline in export and import prices. The WTO expects that lower inflation will boost consumer spending, while lower interest rates should raise investment spending by firms. The risks to merchandise trade mainly remains similar to previous months including geopolitical tensions, regional conflicts and policy uncertainty.

The results and the recent WTO updates indicates the existing volatility of the global markets and the engineering industry’s performance will depend on the intitiaves of both the industry and the government.