In an unexpected turn of events, trade between India and Russia has seen a remarkable surge in July, with shipments from India to Russia more than doubling compared to the previous year. This surge comes at a time when demand for engineering goods from major markets like the US and China has been slackening. According to a media release by EEPC India, the Engineering Export Promotion Council, shipments to Russia skyrocketed to US$ 123.65 million in July 2024 from US$ 55.65 million in July 2022, representing an astonishing rise of 122.03 percent. This surge has raised eyebrows among economists and industry experts, prompting discussions about the underlying factors driving this trend.
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Engineering Exports Landscape: Exploring the Dynamics
Engineering exports to the US dropped by 10.4% year-on-year to US$ 1.44 billion in the same period. Similarly, engineering exports to China experienced a 10% year-on-year decline in July 2024, amounting to US$ 197.98 million.
Amid this slowdown in demand for engineering goods from major markets like the US and China, shipments to Russia have continued their upward trajectory. In July 2024, shipments to Russia surged to a remarkable US$ 123.65 million from US$ 55.65 million in July 2022, marking a remarkable rise of 122.03 percent. This surge in trade has been reported by the Engineering Export Promotion Council (EEPC) India in a media release on Wednesday.
Interestingly, the total value of exports to Russia in July 2024 exceeded those to Australia, which imported engineering goods worth US$ 115.14 million from India, showing a decline of 5.7% compared to the previous year. Along with this, exports to Germany bucked the trend, maintaining positivity and growing by 2% year-on-year to reach US$ 346.36 million in July 2024, even as the European economy grapples with a slowdown.
Global Impact: India-Russia Trade Dynamics and Overall Export Scenario
Among the 25 crucial markets for Indian engineering goods, which collectively contribute more than 76% to total exports, 14 countries witnessed a year-on-year decline in July 2024. In contrast, the remaining 11 countries saw positive growth. Noteworthy growth was observed in regions such as West Asia and North Africa (WANA), North East Asia, and CIS countries. However, regions like North America, ASEAN countries, EU countries, Sub-Saharan Africa, South Asia, Latin America, and Oceania witnessed a decline in exports during the same period.
Overall, India’s engineering exports faced a decline of 6.62%, falling from US$ 9.37 billion in July 2022 to US$ 8.75 billion in July 2024.
Challenges and Opportunities Ahead
The decline in engineering exports can be attributed to various factors, including a drop in exports of iron and steel and aluminum, coupled with falling global demand due to recession-like situations in major developed regions. This decline underscores the necessity for India to diversify its markets.
According to the Union commerce ministry’s quick estimates, engineering exports accounted for 24.26% of India’s total merchandise exports in July 2024.
The substantial increase in shipments from India to Russia in July is a remarkable development that underscores the evolving dynamics of global trade. This surge not only signifies economic growth and improved diplomatic relations but also presents challenges that need to be addressed for sustainable progress. As India and Russia continue to collaborate and strengthen their trade ties, it remains to be seen how this positive trajectory will shape the future.
