FTAs with Australia and UAE would be able to reverse some of the negative impact of global decline on India’s exports: Mr Garodia
February 20: Driven by sharp fall in exports of iron and steel and economic slowdown in key markets including EU and China, engineering goods exports witnessed a 9.8 per cent year-on-year decline in January to US$ 8.41 billion.
Cumulative engineering exports during April-January 2022-23 also declined by 3.68 per cent year-on-year to US$ 88.27 billion.
In rupee terms, cumulative engineering exports recorded 3.47 per cent growth year-on-year. This disparity was due to 7.7 per cent depreciagtion of Rupee vis-à-vis the US Dollar during April-January 2022-23 over April-January 2021-22.
Rupee also depreciated by 10% in January 2023 over January 2022.
An EEPC India analysis showed exports of iron and steel declined by 42 per cent in January 2023 over January 2022 and by 42.7 per cent during April-January 2022-23 over the same period last fiscal.
"Sharp fall in iron and steel exports was one of the major reasons for decline in engineering exports. Recent withdrawal of the export duty on selected steel items is expected to restore the exports of iron and steel in the coming months provided global economic activities are healthy," said EEPC India Chairman Mr. Arun Kumar Garodia.
The iron and steel demand has fallen sharply across the globe owing to several factors such as global economic slowdown, high energy prices, ongoing Ukraine-Russia crisis and sharp downturn in China.
"Not only steel, similar trends are also seen in metals such as aluminum and copper. For India another critical factor has been decline in demand in its major South Asian neighbors including Bangladesh, Nepal and Sri Lanka due to dwindling foreign exchange reserves in these countries," said Mr. Garodia.
As per the quick estimates of the Department of Commerce, Government of India, the share of engineering exports to total merchandise exports from India was 25.55 percent in January 2023 while for cumulative engineering exports during April-January 2022-23, the share was 23.91 per cent.
The data shows 15 out of 34 engineering panels witnessed positive year-on-year growth in exports during January 2023 vis-a-vis the same month last fiscal.
Engineering products like iron and steel and non-ferrous metals like copper, aluminium, tin and other products, industrial boilers, IC engines and parts, air-condition and refrigeration machinery, machinery for dairy, two–three wheelers, bicycle parts, auto tyres and hand tools witnessed decline in exports during January 2023 vis-à-vis January 2022.
On a cumulative basis 21 out of 34 engineering panels recorded positive growth during April-January 2022-23 over the same period last fiscal. Major decline was witnessed in iron & steel segment, non-ferrous segment, two-three wheelers, bicycle parts, ship and boats and project goods.
In terms of region, maximum growth in exports was witnessed in North America followed by Latin America and Oceania in cumulative terms. Decline in exports was observed in North-East Asia, South Asia, CIS and EU.
Top exporting destination countries that witnessed positive growth during April-January 2022-23 were USA, Germany and Mexico whereas top destinations with negative export during the same month include UAE and Italy.
During the first ten months of fiscal 2022-23, engineering exports achieved 69.50 per cent of the US$ 127 billion target set by the Government for the entire fiscal.
Commenting on the outlook for the sector, the EEPC India Chairman said that the global situation does not look much optimistic with the IMF estimating a decline in global growth from 3.4 percent in 2022 to 2.9 percent in 2023.
"Hence further decline in demand may be expected in the coming months. We are hopeful that India’s recent FTAs with Australia and UAE would be able to reverse some of the negative impact of global decline on India’s exports," Mr Garodia said.