India’s Steel Export Setback: How Falling Engineering Shipments Could Impact the Steel Sector and Economy

India's engineering goods exports experienced a 8.62% year-on-year decline in February 2025, dropping to $9.08 billion from $9.94 billion in the same month the previous year. This marks the first contraction since April 2024, ending a nine-month growth streak. The primary contributors to this downturn were significant reductions in exports of iron and steel (down 40%) and aluminium and related products (down 58%). ​
Implications for the Indian Economy:

Trade Balance Concerns: The decline in engineering exports, particularly in foundational sectors like steel and aluminium, can adversely affect India's trade balance, potentially leading to a widening current account deficit.​

Industrial Output and Employment: Reduced export demand may result in decreased production within these industries, potentially impacting employment rates and industrial growth, given the substantial workforce engaged in the steel sector.​

Impact on the Indian Steel Market:

Domestic Price Pressures: A decrease in export volumes can lead to surplus supply in the domestic market, exerting downward pressure on steel prices. This scenario challenges the profitability of steel producers and may deter future investments.​

Increased Import Competition: The global steel market is experiencing shifts due to trade policies, such as the U.S. imposing a 25% tariff on steel and aluminium imports. This action has prompted countries like China, Japan, and South Korea to redirect their steel exports towards markets like India, intensifying competition for domestic producers. ​
Strategic Recommendations:
Diversification of Export Markets: To mitigate reliance on traditional markets, Indian exporters should explore emerging economies and regions with growing infrastructure demands.​
Enhancing Domestic Competitiveness: Investing in technological advancements and improving production efficiencies can help Indian steelmakers compete effectively against imported steel.​
Policy Interventions: The government might consider implementing safeguard duties or anti-dumping measures to protect domestic industries from unfair trade practices and import surges. For instance, India has proposed a 12% safeguard duty on steel imports for 200 days to counter the influx of cheap steel from countries like China, South Korea, and Japan.