NEW DELHI: A significant uptick in the demand for engineering and value-added iron and steel exports is helping boost Country's total shipments.
"Recent jump in exports growth to 17.5% in February is partly due to base effect (9.7%) and partly due to a whopping increase in engineering goods. The export of engineering goods increased by 47.3% in February compared to 11.9% in January. The contribution of engineering goods to India's exports is 10.2% in February 2017, which was only 2.7% in January," said a report authored by Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India (SBI).
"Export of iron and steel recorded 156% growth in February 2017 over February 2016 driven by a substantial increase in overseas shipment to Vietnam, Belgium and Italy and UAE," an official of Engineering Export Promotion Council said recently.
The market-wise study revealed the fact that demand for Indian engineering products from the Association of Southeast Asian Nations (Asean), which constituted 23.3% of total engineering exports during February 2017, witnessed a 248% rise in February 2017. Exports to the European Union and the Middle East also increased sizeably.
Overall exports have been on the rise for the last six months following an economic recovery in the developed regions like the US and the EU that consume 30% of India's engineering exports and the tightening of global commodity prices, especially of crude oil.
During April-January, engineering exports touched $50.87 billion, exceeding the total shipments in 2015-16 which stood at $49 billion.
The revival in India's engineering exports is being led by iron and steel, with major pull factor arising from revival in demand in the US, China and also in Belgium and Spain, marking renewal of demand for basic metals, a development which augurs well for the export sector, says an analysis done by EEPC.
"Growth in engineering goods driven by products of steel and ferro alloys is a welcome development for Indian steel sector that has been stuck in the vicious cycle of global overcapacity and price declines. In fact, the surge in export growth is a combination of both price and quantity effect as our research shows," the SBI report says.
"Product category-wise analysis showed that growth in February 2017 was driven by a robust increase in the exports of 'ships boats and floating structures' and 'iron & steel' constituting 18% and 15% of total engineering exports respectively," the EEPC official said.
"This only indicates that the bellwether of global activity is finally getting faster including Japan, European Union, Asian economies and even Latin American economies.
We hope such a global recovery is not a flash in the pan anymore," the report says.