Engineering exports recorded more than 10% growth in January 2026 after registering marginal growth last month

The following table depicts region wise India’s engineering exports for April-February 2025 as compared to April-February 2024

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

• Iron and Steel :- Insights:

a) During April-February 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 3% during the same period, after continuous decline for many months. However in the month of February 2025, both Iron and Steel as well as Products of Iron and Steel witnessed decline in exports to the extent of 40% and 4% respectively.

b) US Tariffs: The 25% tariffs imposed by the US on steel imports ( as per the proclamation order dated on 18^th February 2025) have created a challenging environment for Indian steel exporters. Although India's direct steel exports to the US are relatively low, the tariffs have led to increased global competition and price pressures. The tariffs have also resulted in a shift in trade flows.

c) Market Sentiment and Trade Policies:Uncertainty around trade policies and potential trade wars has led to cautious buying behavior and delayed purchasing decisions. Protective measures by other countries, such as antidumping duties and safeguard measures, have also restricted India's steel exports.

a) Impact of US Tariffs on India's Steel Exports: (i) While the direct impact of US tariffs on India's steel exports is limited due to the low volume of exports to the US, the indirect effects are significant. The tariffs have led to increased global competition and price pressures, affecting India's export competitiveness. (ii) On the other hand, India has proposed a 12% safeguard duty on a broad range of steel products to protect its domestic market from increased imports, This move aims to prevent a flood of cheap steel imports from disrupting the local industry. The safeguard duties will be in place for 200 days, pending a final decision.In this regard, EEPC India urges a balanced approach to safeguard duty to protect MSMEs and user industries from potential price hikes and supply disruptions.

b) Overall price scenario in various countries post imposition of US tariff : 

(i) US: The US imposed a 25% tariff on all steel imports, which has significantly boosted domestic steel prices. Hot-rolled coil (HRC) prices soared, with the Midwest HRC price averaging $807 per short ton in February, up from $698 in January. The tariffs have led to increased demand for domestic steel, extending delivery lead times and pushing up prices further. (Source: SPG Platts Connet)

(ii) China: The Chinese steel market experienced muted sentiment due to the US tariffs. Steel prices have remained relatively flat, with hot-rolled coil prices averaging 3,419 yuan per metric ton in February 2025. The tariffs have created uncertainty, leading to cautious buying behavior and concerns about a potential trade war. (Source: SPG Platts Connet)

(iii) European Union: EU flat steel prices have risen due to expectations of tighter import quotas in response to the US tariffs and improving manufacturing activity. Northern EU flat steel prices reached a six-month high of €615 per metric ton in early March 2025. (Source: SPG Platts Connet)

(iv) Turkey: Turkey's scrap prices have strengthened due to higher US steel and scrap prices. However, slow rebar sales have capped further gains.

(v) India:  The imposition of a 25% tariff on steel imports by the US has led to significant shifts in global trade flows, with Asian exporters redirecting shipments to India. This has increased import pressure on the Indian market, affecting domestic steel prices and earnings. Despite the minimal direct impact due to low export volumes to the US, the increased competition and price pressures from redirected shipments have led to fluctuations in India's steel prices. For instance, hot-rolled coil (HRC) prices rose by 3% month-on-month in February 2025, driven by hopes of safeguard duties and reduced import volumes. (Source: BigMint).

• Non- Ferrous Sector (Copper, Alumimnium and Zinc)

Copper:

India’s growing copper demand and its position as a net importer in Copper: India’s copper demand has been on the rise driven by requirement of clean energy systems and increasing penetration of electric vehicles. The domestic demand for copper is expected to double by 2030. India has turned into a net importer of copper since the closure of Vedanta's Sterlite copper plant in Tamil Nadu's Tuticorin in 2018. The country’s demand for copper is also indicated by the fact that many new companies are venturing into copper production in India – for instance JSW now plans to set up its own smelter facility 

• in Odisha with an investment of around 120 billion rupees and scale up the capacity to 1 million metric tons by 2033 or 34. The Adani Group has also set up a $1.2 billion copper smelter in Guajarat.

• Surplus in the global copper market: As per S&P Global’s forecast, the refined copper market is going to experience a surplus for 2025. Many new countries including non-producers such as Saudi Arabia are also joining the production trend. However, the copper concentrate market is expexted to face deficits due to scant supply. India is dependent on imports for its suppky of copper concentrates and there is a 2.5% tariff. The industry has urged the government to reduce the tariff to zero to facilitate import.

Aluminium

• RODTEP benefit to SEZ units was only provided in October, November and December 2024 although the scheme was implemented from April 2024 for entire financial year. This is making exports unviable, and not competitive.

• Exports to USA are reducing year on year majorly because of not getting exemption from Section 232 duty, over and above not getting rodtep benefit for SEZ.

Zinc:

As per latest reports, there is a global oversupply of Zinc which has also affected its global prices.

Source : DGCI&S

The table below indicates the exports from top Indian states. It is evident from the table that almost 94.7 % of India’s exports is contributed by the listed 12 states. Within this almost 56.5 percent of exports is done by Maharashtra, Tamil Nadu and Gujarat together.

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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 and October 2024 again saw both moving in the same direction by securing acceleration in growth. November 2024 however saw slowdown in engineering export growth but faster manufacturing growth vis-à-vis October 2024 while growth in both engineering exoports and manufacturing output moderated in December 2024. In January 2025 once again, the direction was opposite as engineering exports growth moderated against a faster manufacturing output growth.

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