India’s engineering goods exporters are preparing to navigate a potential $4-5 billion impact following the Trump administration’s 27% reciprocal tariff. Exporters in the industrial product manufacturing sector are actively expanding their outreach to Europe, Latin America, and Central America, ensuring sustained export momentum despite policy headwinds.
The Engineering Export Promotion Council (EEPC) noted that the new reciprocal tariff will affect industrial and electrical machinery, automobiles, auto components, and aircraft-related products. Iron and steel products, as well as aluminium, copper, zinc, and lead, will also be taxed. Even so, India’s engineering sector remains cost-competitive and well-positioned to retain a strong share of global sourcing.
“Our annual exports to the US are worth around $20 bn. The realignment of tariffs is expected to result in a reduction of around 20-25% in our exports in the first year,” said EEPC Chairman Pankaj Chadha.
Top Industrial Product Manufacturing Goods in Focus
Key engineering goods expected to see pricing adjustments under the new tariffs include:
- Industrial machinery
- Iron and steel
- Non-ferrous metals
- Auto components
- Electrical machinery
- Automobiles
Export Trends and Market Share
The US accounted for approximately 16% of India’s total engineering exports in April-February during 2024-25.
- Exports to the US grew 8.3% Y-o-Y, while overall engineering exports grew 8%.
- In February 2025, shipments to the US rose 5.8% Y-o-Y to $1.66 billion.
Global Competition and India’s Position
Indian engineering goods compete with Mexico, Canada, China, and Japan. Notably, tariffs also affect several competing countries, giving India a level playing field and reaffirming its position as a cost-efficient sourcing destination.
Ankit Jain, Vice President, ICRA stated, “While tariffs have been imposed on the import of Indian capital goods, the impact is likely to be neutral as similar or higher tariffs have been imposed on competing countries like Korea, Japan, Vietnam, China, Taiwan etc.”
The Chair of the MSME Committee, Vinod Karwa, commented, “The new tariff imposed will have no immediate adverse effect on MSME engineering and auto component manufacturers, as India is a low-cost country.”
Industry leaders are treating this as an opportunity to broaden India’s export footprint. While exploring potential strategies, Chadha stated that India needs to diversify across new markets. The EEPC is initiating outreach to the EU, Latin America, and Central America.
Attribution:
Source: This summary draws from an article first published by The Financial Express on April 3, 2025, with contextual updates for relevance.
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