India’s engineering exports plunged 16.71% in October 2025, hitting $9.37 billion, largely due to a significant drop in shipments to the US and a high base effect. Key markets like Asean also saw steep declines. Despite this monthly dip, cumulative exports for April-October 2025 showed a modest 1.68% growth.
Feeling the Pinch: India’s Engineering Exports Face Headwinds
October brought a chilling gust to India’s engineering export sector, with shipments plummeting a concerning 16.7%. This dip signals more than just a seasonal lull; it highlights the growing challenges Indian exporters face in a turbulent global trade environment. While India’s economy has shown resilience in various sectors, the engineering sector, a significant contributor to the nation’s export basket, is seemingly feeling the bite of escalating global trade tensions and shifting demand patterns.
The numbers paint a stark picture. The overall value of engineering goods exports shrank considerably compared to the same period last year. But where exactly are these headwinds coming from?
US Tariffs Cast a Shadow on Engineering Exports
One significant factor contributing to this slowdown is the impact of US tariffs. Trade barriers erected by the US, particularly on certain steel and aluminum products, have made it tougher for Indian companies to compete. These tariffs add extra costs, making Indian goods less attractive compared to those from countries with more favorable trade agreements. It is no surprise that American buyers are looking elsewhere.
However, the US isn’t the only market influencing this downturn.
ASEAN, EU, and UAE: Waning Demand Across Key Markets
Beyond the US, exports to other crucial markets, including ASEAN countries, the European Union, and the UAE, have also shown signs of weakening. This suggests a broader trend of softening demand across multiple regions, hinting at more complex underlying causes than just tariff disputes with one nation.
The ASEAN region, traditionally a strong partner for India, is experiencing its own economic fluctuations, impacting its appetite for Indian engineering goods. Similarly, economic uncertainties within the EU and changing dynamics in the UAE are contributing to the decline. It is possible that post-pandemic recovery is uneven, and businesses in these regions are taking a more cautious approach to investment and procurement.
Addressing the Challenges in Engineering Export Growth
The engineering sector forms a critical part of India’s manufacturing base, and its vitality is tied closely to the nation’s economic aspirations. So, what can be done to navigate these choppy waters?
One approach is diversifying export markets. Relying too heavily on a few key regions makes the sector vulnerable to localized economic downturns or policy changes. Exploring new markets in Africa, Latin America, and other emerging economies could provide alternative avenues for growth.
Another crucial element is enhancing the competitiveness of Indian engineering firms. This requires investment in research and development, adoption of advanced technologies, and upskilling the workforce. By producing high-quality, innovative products at competitive prices, Indian companies can better withstand global competition.
The government can also play a proactive role by negotiating favorable trade agreements with key partners and providing support to exporters through financial incentives and streamlined regulatory processes. For example, strengthening existing trade agreements or forging new partnerships with nations outside traditional zones could bolster exports. See how the government is supporting local textile exports [here](internal-link-to-related-textile-exports-article).
Furthermore, focusing on value-added exports rather than simply raw materials or semi-finished goods can significantly boost revenue and resilience. By climbing up the value chain, Indian companies can command higher prices and differentiate themselves in the global marketplace.
Charting a Course for the Future
The recent decline in engineering exports is undoubtedly a cause for concern. However, it also presents an opportunity to reassess strategies and build a more resilient and diversified export sector. By proactively addressing the challenges related to US tariffs, waning demand in key markets, and other constraints, India can position its engineering industry for sustainable growth in the years to come. The future success of India’s engineering exports depends on its ability to adapt, innovate, and forge new paths in an ever-evolving global landscape.
