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Exports of steel and aluminium products are expected to shrink by around 20%, while auto sector exports are likely to fall by $0.5 billion. These declines are relatively modest since global competitors face the same tariff levels.
Disproportionate impact on “Other” engineering goods
The real challenge lies in the $12.5 billion worth of other engineering goods, which are projected to suffer a 50% drop in sales. With US tariffs on Indian goods at 50%, compared with around 20% for competitors, buyers are expected to increasingly shift to Vietnam, Indonesia, and the European Union. Industry representatives have been urging the government at multiple forums to roll out a mix of measures to help offset the heavy export losses.
Ahead of the July tariff deadline—when baseline tariffs were still at 10%—exporters pushed as many shipments to the US as possible. As a result, India’s overall engineering exports grew 6.08% year-on-year to $39.34 billion in April–July. Exports to the US surged 12.6% to $6.95 billion during the same period, with July alone witnessing a 19.2% jump to $1.81 billion.
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Within this, industrial machinery was the largest export to the US, growing 17% to $1.57 billion in April–July. Iron and steel products rose 12% to $1.05 billion, electrical machinery and components climbed 19% to $1.06 billion, and non-ferrous metal exports surged 27% to $605 million. Auto component exports, however, slipped 1% to $781 million.
Government’s response and future strategy
To mitigate the crisis, the government is focusing on market diversification and is preparing a comprehensive package under the Export Promotion Mission (EPM). “The mission, which was announced much before the tariff action by US President Donald Trump, will be presented to the cabinet for approval soon,” commerce and industry minister Piyush Goyal said Thursday.