Engineering Goods Exports to US Drop Amid Tariff Hikes
India's engineering goods exports faced a significant setback in September 2025, witnessing a decline of nearly 9.4% to the US. This drop is concerning, especially since engineering goods account for almost one-fourth of India's total goods exports. However, the overall exports for this segment rose by 2.93%, primarily due to resilience shown in the European market.
In September, engineering goods exports rose to $10.11 billion compared to $9.8 billion the previous year. Notably, steel and iron exports surged by 17%, while automobile exports saw an impressive 33% rise. Conversely, exports of industrial machinery, including boilers and parts, fell by 18%, highlighting mixed performance within the sector.
Data indicates that exports to the US dropped to $1.4 billion, while exports to the UAE also saw a decline of 5.3%. In contrast, shipments to Germany, the UK, Saudi Arabia, Singapore, and Italy experienced significant growth, ranging from 18% to 45%. This trend underscores the shifting dynamics of global trade, where markets are diversifying away from traditional partners.
One of the key factors influencing these trends is the depreciation of the Indian rupee, which fell by over 5% in September compared to the previous year. The rupee's value against the US dollar continued to decline for the fourth consecutive month, closing at 88.79, just shy of its weakest level ever. Factors like capital outflow due to US pressure, rising gold imports, and increased government borrowing have further strained the currency.
Interestingly, despite the challenges posed by higher tariffs and a depreciating rupee, India’s overall goods exports remained positive. The Engineering Export Promotion Council of India (EEPC) noted that global trade expanded significantly in the first half of 2025, with a focus on South-South trade. Engineering exports have shown growth for four continuous months, indicating that India is finding new opportunities in regions like Sub-Saharan Africa, ASEAN, and Latin America.
While the decline in US exports raises concerns, it is essential to recognize that the impact of Section 232 tariffs on the steel and aluminium sectors has been minimal. Exports in these sectors to the US have shown robust growth, suggesting that Indian exporters are adapting well to the changing trade landscape.
