India's engineering exports took a hit in October, with a 16.7% year-on-year slump to $9.37 billion. The main culprit? A sharp decline in shipments to the US, exacerbated by Section 232 tariffs and a high base effect. But here's the twist: despite this setback, engineering exports still managed a 1.68% growth cumulatively from April to October 2025, rising to $68.73 billion from $67.60 billion the previous year. So, what's the real story? Let's dive in.
The US, India's top destination for engineering goods, saw a 14.5% drop in shipments to $1.39 billion in October 2025, compared to $1.63 billion a year earlier. This decline was fueled by the combined impact of Section 232 tariffs and reciprocal tariffs. The UAE, another key market, witnessed a 19.3% fall in exports to $667 million. And it wasn't just the US and UAE; exports to the Asean region plummeted by almost 50% to $1.02 billion, while the EU and North America also experienced year-on-year declines for the second consecutive month.
But here's where it gets interesting: while a high base effect and US tariffs contributed to the October decline, the industry believes trade diversion due to these tariffs might be a hidden culprit behind the overall declining exports. The EEPC Chairman, Pankaj Chadha, highlighted this, welcoming the government's approval of over Rs 25,000 crore for the Export Promotion Mission and Rs 20,000 crore for credit guarantee support. However, the industry is also concerned about the impact of these tariffs on long-term trade relations.
The data tells a story of significant drops across various regions, including WANA, South Asia, Latin America, and the CIS. Key categories like 'Electrical machinery', 'Products of iron and steel', 'Industrial machinery', and 'Aluminium products' also registered year-on-year declines. This October's decline marked the second monthly setback of FY26, ending a four-month growth streak. The 'Aircrafts and Spacecraft' and 'Ships, Boats and Floating structures' panels saw major contractions, with both categories falling over 80%.
Despite these challenges, the engineering export sector is not all doom and gloom. The cumulative growth from April to October 2025 shows a positive trend, even if the October slump was a setback. The question remains: can India's engineering exports bounce back from this hit, and what role will trade policies and government support play in shaping the future of this vital sector?
