India’s Engineering Export performance

Context

According to the Engineering Export Promotion Council of India (EEPC), India’s engineering goods exports to Bangladesh have confronted a significant challenge due to the recent unrest in the neighbouring country.

India’s Engineering Export Overall Performance

• Accounting for 3% of the total GDP, the Indian engineering sector paperwork is an important spine of the Indian economy.
• The engineering sector is the most important contributor to India’s standard exports with a share of 24% and also contributes approximately 40% of the full production export.
• Engineering exports in economic 2023-24 grew by 2.13% and reached US $109.32 billion, which is opposite to the products export trend which declined by 3.11%.
• It completed well given the weak global change tendencies, dwindling demand, foreign trade crisis and geopolitical conflicts.
• Today, out of total engineering exports, the percentage of patron durables reduced from 34% in 1956-57 to 9% in 2023-24, even as the percentage of capital items increased significantly from 12% in 1956-57 to 60% in 2023-24.

Export Destinations

• India exports engineering products to the subsequent areas: ASEAN, North-East Asia, Africa, EU, North America, CIS, Latin America, South Asia, Africa, Middle East, West Asia, and so forth.
• India’s engineering exports persevered their year-on-year increase for the second one consecutive month into January 2024 with a 4.20% growth that was attributed to multiplied shipments of Iron & Steel, Aircrafts, spacecraft and parts, Copper and copper products, and Electric machinery.
• Also, heightened demand from South Asia, the European Union, and North America contributed to this growth.

Concerns after recent turmoil in Bangladesh

• Export Decline: In the first four months of the year, India’s engineering goods exports to Bangladesh declined by 9%.
  • It has raised issues for an industry that constitutes one fourth of India’s products exports.
• Supply Chain Disruptions: The ongoing unrest in Bangladesh disrupted supply chains, affecting the smooth glide of products between the 2 countries.
  • As a result, Indian exporters confronted problems in transport engineering products to their Bangladeshi opposite numbers.
• Revenue Losses and Uncertainty: The situation has raised the spectre of sales losses for Indian exporters. With engineering goods being a crucial part of India’s export portfolio, any disruption will have some distance-achieving consequences.
• Specific Export Categories: While universal engineering goods exports from India had risen by 4.2% between April and July, there was a sharp 31.6% dip in exports of iron and steel.
  • Also, numerous of the world’s pinnacle export markets—including Italy, Korea, Nepal, and Bangladesh—confirmed reduced appetite for Indian goods during this period.
• Offsetting Factors: Despite the decline in exports to Bangladesh, there have been tremendous trends somewhere else. Exports to the United Arab Emirates (UAE) saw an almost 44% spike, and shipments to Saudi Arabia increased by 33%.
  • These two nations collectively imported $4.4 billion worth of Indian engineering goods, second to the $6.1 billion exported to the United States.
• Global Impact: The unrest in Bangladesh has not only affected Indian exporters but also triggered big losses for exporters globally.
  • The violence and protests disrupted imports, growing demanding situations for corporations throughout borders.

Government Initiatives

• In 2019, the government announced an investment of Rs. A hundred lakh crore (US$ 1.Five trillion) in infrastructure improvement over the next 5 years.
• In the Interim Union Budget 2024-25, the government greatly pushed the infrastructure sector by allocating Rs. 11,eleven,111 crore (US$ 133 billion) to decorate the shipping infrastructure.
• The government of India has carried out various export promotion schemes, which includes the Zero Duty Export Promotion Capital Goods (EPCG) scheme, Towns of Export Excellence (TEE), Market Access Initiative (MAI), etc aiming at encouraging the exporter and to help growth the sales from worldwide markets. 
  • Schemes including duty exemption, development authorization, obligation-unfastened import, rebate on carrier tax, and so on. Have been carried out to ease raw cloth imports.
• India has taken several initiatives to guide and beautify the competitiveness of the domestic engineering goods manufacturing corporations including the ‘Make in India’ initiative, PLI scheme for Automobile, and Auto additives, PLI scheme for National Programme on Advanced chemistry cell (ACC) Battery Storage, FAME INDIA II scheme, Capital Goods Scheme, Industry 4.0.

Conclusion

The recent turmoil in Bangladesh has had tangible effects on India’s engineering exports, emphasising the significance of strong trade partners between the 2 countries. As the state of affairs evolves, exporters will want to evolve and discover methods to mitigate disruptions in supply chains.

Source: The Hindu

UPSC Mains Practice Question

Q. Critically examine the compulsions which prompted India to play a decisive role in the emergence of Bangladesh. (2013)

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