MONTHLY MUSINGS

At a time when the global trade is going through realignments pushed by changing geopolitics, India has taken a bold step towards strengthening its bilateral ties with the US – in February 2026, the two countries reached a framework for an interim trade agreement aimed at deepening bilateral ties between the two countries and a common commitment towards a reciprocal and balanced mutual trade. The agreement is expected to not only facilitate market access but also encourage investments and technology transfers from the US thereby contributing towards Make in India. This is crucial for the Indian exporters ever since the imposition of the Section 232 and the reciprocal tariffs by the US as the country remains India’s largest export destination accounting for around 20 percent of India’s total merchandise exports. In FY 2024-25, India’s total merchandise exports to the US stood at around USD 86.5 billion registering a growth of 11.6 percent. In terms of engineering too, US is the numerouno export destination for India, with bilateral trade reaching USD 35.3 billion in FY 2024–25, including USD 19.2 billion in exports and a trade surplus of USD 3.1 billion. Over the past five years, India’s merchandised exports to the U.S. have grown at a CAGR of 13.8 percent, while engineering exports have expanded at 14.1percent. US accounts for almost 18 to 20 percent of India’s engineering exports. This trend continues in the current fiscal, with April–December exports to the USA rising from USD 60.02 billion to USD 65.86 billion, while engineering exports increased from USD 13.99 billion to USD 14.68 billion, maintaining a stable share of about 22–23%, maintaining its share in India’s export basket. Despite this, India has significant scope to enhance its presence in the US market - In the last three years (2022, 2023 and 2024), USA’s average global imports across engineering panels totalled USD 1.28 trillion, with India contributing USD 22.8 billion, representing a modest 1.8 percent share. In this regards, this trade deal can be a game changer as the United States has resorted to reducing India’s reciprocal tariff from the current 50 percent to 18 percent on goods originating from India including not only engineering products but also textile and apparel, leather and foot wear, plastic and rubber, organic chemicals, etc. Furthermore subject to the conclusion of the interim agreement, US may also remove the reciprocal tariff on a wide range of goods including aircraft parts, pharmaceuticals and gems and diamonds, etc. Additionally the deal also mentions that for ease of compliance with applicable technical regulations, the US and India are expected to discuss their respective standards and conformity assessment procedures for mutually agreed sectors. Therefore this trade deal is expected to deliver significant benefits to India’s exporting community including engineering exporters.

In terms of export performance, India’s engineering exports continued its growth run in December 2025 registering a growth of 1.28 percent.After registering highest engineering exports and highest year-on-year growth of fiscal 2025-26 in the month of November 2025, Indian engineering exports recorded a marginal growth in December 2025 at 1.28 percent. Although the engineering shipment in December 2025 at USD 10.98 billion was the second highest of fiscal 2025-26 and very close to that of November 2025 at USD 11.01 billion, the growth was marginal due to high base of the previous year as December 2024 saw engineering exports at USD 10.84 billion. Riding on the expected gains from the recently concluded trade deal with the EU and the interim deal with the US, India’s engineering exports to US and major EU economies remained positive. This is a good indicator at this time. As per the recent update by the UNCTAD, as we enter 2026, global trade is subjected to increasing pressure from several factors including slower growth, geopolitical fragmentation, accelerating digital and green transitions and tighter national regulations - UNCTAD estimates global growth will remain subdued at 2.6 per cent in 2025 and 2026, despite potential gains from technologies such as artificial intelligence.

Finally, the recent schemes announced by the Government especially the Market Access Scheme is estimated to be a big enabler of Indian exports. This is crucial at a time when more Indian exporters are eager to participate in global exhibitions and exhibit their products to global markets. In this context, EEPC India along with the Ministry of Power is also organising the Bharat Electricity Summit which is expected to bring together a significant number of Indian exhibitors and foreign buyers in the field of electrical machinery and equipment. The Indian government’s timely support has always helped the engineering sector navigate tough times and we expect this to continue helping Indian exporters achieving bigger targets.