The Engineering Export Promotion Council (EEPC) of India, one of the key export promotion bodies under the Union commerce ministry, fears that the ongoing Russia-Ukraine war could adversely affect India’s engineering exports to Russia.
Russia is the topmost destination for India’s engineering exports in the CIS (Commonwealth of Independent States) region. Engineering exports to Moscow nearly doubled to $789.84 million in the April-January period of the current fiscal year, up from $404.31 million in the same 10-month period a year ago. With Russia being the topmost destination for India’s engineering exports in the CIS region, exports to the nation plays a key role in enhancing exports to the CIS region, said EEPC India.
India has set a target of $1.94 billion of engineering exports to Russia for the current fiscal 2021-22.
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“The last two months of the fiscal, therefore, has been quite important for meeting the target,” said EEPC India in response to Moneycontrol’s query. “This ongoing Russia-Ukraine War may act as the most prominent deterrent in fulfilling the target as the last quarter, especially the month of March usually sees a substantial jump in exports.”
The key engineering goods export to Russia includes iron and steel products, auto components, construction machinery, industrial machinery for dairy and agriculture, electric machinery and equipment, machinery for ATMs, auto tyres and tubes, among others.
“If the war continues for some more days, engineering exports to Russia may not reach the expected level by the end of the fiscal. In addition to the impact on direct trade, volatility in the currency market may also come out as another constraint to trade as Indian rupee sees a depreciation as an impact of the Russia-Ukraine war,” said EEPC India.” However, the impact of currency market volatility will come with a time lag.”
Engineering exports to Russia stood at $544.41 million in 2018-19 and then surged 36 percent to reach $740.89 million in fiscal 2019-20 despite the impact of COVID-19 in the last quarter of the fiscal.
However, in fiscal 2020-21, supply chain disruption across the globe after the outbreak of the Coronavirus impacted global trade severely, with engineering exports to Russia falling 14 percent to $636.58 million. In the ongoing fiscal, engineering exports to Moscow have already surpassed their record high achieved in 2019-20 and were on the way to registering a new all-time high, said EEPC India.
As against the target of $107 billion of engineering exports for fiscal 2021-22, India reported total engineering goods exports of $91.56 billion for the April-January 2021-22 period, reporting a growth of 110 percent over $43.59 billion reported in the same 10-month period of previous fiscal.
As per the Quick Estimates of Foreign Trade for January 2022 released by the Department of Commerce on February 28, the share of engineering in total merchandise exports stood at 26.67 percent in January 2022 as against 25.89 percent in December 2021. On a cumulative basis, the share of engineering in total merchandise exports amounted to 27.08 percent during April-January 2021-22.“Engineering exports continued to remain at the $9 billion mark in January 2022. Of the $107 billion target set for engineering exports in FY 2021-22, the industry has already achieved more than 85 percent,” EEPC India Chairman Mahesh Desai said in a statement. “Given the fact that exports generally exhibit an upward trend in the last quarter of any financial year, engineering exports are expected to achieve their target within stipulated time.”