MONTHLY MUSINGS

Global trade continues to face heightened uncertainty amid persistent geopolitical tensions, supply chain disruptions, and volatile energy markets. As per the UNCTAD updated in April, while global trade performed tremendously well in 2025 recording a growth of 7.5%, the positive trends which continued this year remained fragile and is even expected to slow down in the later part of 2026. Persisting trade tensions across key maritime routes and rising logistics costs have been regarded as major reasons that might contribute to this downfall. Disruptions in key maritime routes such as the Strait of Hormuz have significantly increased freight costs, insurance premiums, and transit risks, adding to the burden on exporters worldwide. At the same time, tightening financial conditions, slowing demand in advanced economies, and currency volatility have further dampened global trade momentum. In this challenging environment, India’s trade performance stands out as a notable achievement. Despite external headwinds, India’s exporting community has maintained stability in exports, with the help of diversification of markets, resilient manufacturing, and proactive policy measures. The ability of Indian exporters to sustain growth in such uncertain times reflects the underlying resilience and adaptability of the country’s trade ecosystem.

The performance of India’s engineering export sector has been particularly remarkable in these difficult times. Engineering exports reached an all-time high of USD 122.43 billion in FY 2025-26, registering a growth of 4.86 percent and reinforcing its position as the largest contributor to India’s merchandise exports. Growth was driven by strong performance across several panels, including automobiles, non-ferrous metals such as copper, iron and steel, electrical machinery, and industrial machinery, indicating broad-based expansion across sectors. While some segments such as aircraft components and medical instruments witnessed moderation, the overall performance remained robust with many product panels registering growth. Regionally, North America and the European Union remained key destinations, with steady growth observed in these markets. At the country level, the United States continued to be the largest export destination, followed by strong performances in Germany and the United Kingdom, while exports to certain West Asian markets declined due to ongoing geopolitical disruptions and logistics challenges. This is despite the growing tariff threats from the USA from the beginning of 2025 and the safeguard duties applied by EU on key Indian exports. Exports to ASEAN, Latin America, NortheastAsia and Oceania recorded significant growth which may also indicate successful market diversification in the face of growing protectionist threats from the US and EU markets. I would like to take this opportunity to thank my fellow exporters for their remarkable contribution to the country’s economic growth.

While the future global trade outlook continues to remain volatile,India’s trade prospects are expected to be further strengthened by its expanding network of free trade agreements and continued government support. The engagement with the European Free Trade Association under the Trade and Economic Partnership Agreement and the recently concluded negotiations with New Zealand mark important steps in deepening India’s integration with global markets. These agreements are expected to enhance market access, promote high-technology exports, and support diversification of trade. At the same time, targeted government initiatives such as the RELIEF Scheme, aimed at offsetting high logistics and insurance costs, along with interest subvention support for key sectors, have provided critical assistance to exporters navigating these challenging conditions. Let me take this opportunity to also highlight the recent inclusion of Chapter 72 in the Interest Subvention Scheme, a long-standing request from EEPC India. We are grateful that the Government for such timely support.

I would also like to add, EEPC India is participating in severalinternational events in the upcoming months to showcase India’s engineering prowess. All our members are requested to visit the official website and register in their preferred exhibitions. With a combination of strategic policy support, product and market diversifications and expanding global partnerships, India’s engineering sector is well positioned to sustain its growth trajectory even in an uncertain global trade environment.

Thank you.