Oversight

We now analyse the performance of some of the important products during Febru-ary 2022. We have taken the major pan-els and computed the top importers to get an idea of the current trade pattern. (Table5)

Engineering product panels – some observations

• Italy, UAE, and Vietnam were the top three importers of Indian iron and steel during April-February 2021-22 while USA, Germany, and UK were the top three importers of India’s products of iron and steel during the same period as compared to April-February 2020-21.
• USA was the largest importer of India’s industrial machinery during April-Feb-ruary 2021-22 in India’s global import of the product group. Thailand and Germa-ny were the two immediate followers of USA.
• South Africa, Mexico, and Nigeria were the top three importers of India’s auto-mobiles during April-February 2021-22 in India’s global exports respectively over the same period last fiscal.
• China, South Korea, and USA were the top three importers of India’s non-ferrous metals and products during April-Febru-ary 2021-22 while USA, Germany, and Poland were the top three importers of India’s electrical machinery and compo-nents during the same period.
• USA, France, and UK were the top three importers of India’s aircraft and space - craft during April-February 2021-22 in India’s total global exports of the product followed by Singapore and Germany.
• UAE, Singapore, and Sri Lanka became the largest importers of ships, boats, and floating structures followed by Malaysia and Indonesia. While for the auto com-ponents’ product group, USA remained the top importer in April-February 2021-22 followed by Germany, Bangladesh, Brazil, and Turkey.

The engineering sector is an important component of the broader manufactur-ing sector and the share of engineering production in overall manufacturing output is quite significant. As exports generally come from what is produced within a country, some correlation be-tween manufacturing production growth and engineering export growth should exist. We briefly looked at the trend in manufacturing growth as also engineer-ing export growth to see if they move in tandem. It may be mentioned that man-ufacturing has 77.63 percent weightage in India’s industrial production.

Engineering exports growth and man-ufacturing output growth moved in the same direction in as many as nine out of 12 months in each of the fiscal years 2019-20 and 2020-21. During the ongo-ing fiscal, engineering exports growth and manufacturing growth moved in the same direction in six out of 11 months till February 2022.

The link between these two may not be established on a monthly basis, but a pos-itive correlation may be seen if the medi-um- to long-term trend is considered.

How did the exchange rate fare during February 2022 and what was the recent trend in INR-USD movement? In order to get a clearer picture of the recent trend, we took the exchange rate of February 2022, and also considered the monthly average exchange rate of the rupee vis-à-vis the dollar for each month of fiscal 2021-22 as well as 2020-21 as mere one month figure does not reflect any trend. Later, we will provide the monthly trend of rupee-dol-lar for each month of 2021-22 as we move forward with time. The following table clearly depicts the short-term trend:

The rupee in February 2022 depreci-ated vis-à-vis the dollar both on a on a month-on-month as well as year-on-year basis: The war between Russia and Ukraine resulted in sudden rise in crude prices and the rupee depreciated in Feb-ruary 2022 as India is a net importer of crude oil.

• Engineering exports are most likely to meet the target of $107 billion by the end of FY 2022 as total engineering exports crossed $101 billion in April-February 2021-22
• India’s engineering exports recorded 33.31 percent y-o-y growth in February 2022 by climbing up to $9.4 billion from $7.05 billion in February 2021
• Exports during April-February 2021-22 stood at $101.7 billion, registering 49.9 percent growth over the same period the previous year.
• In April-February 2021-22, share of engineering in total merchandise export was 26.94 percent
• 31 out of 34 engineering product panels witnessed positive y-o-y growth during February 2022
• Only ships, boats and floating structures, project goods, and industrial machinery like boilers, parts, etc conceded decline in y-o-y exports during February 2022
• Export to all the regions grew y-o-y in February 2022 other than Sub-Saharan Africa.
• India’s engineering imports recorded positive growth of 7 percent during February 2022 by increasing to $9.4 billion
• Negative imports growth was witnessed by engineering product categories including iron and steel, non-ferrous metals, machine tools, machinery, electrical and non-electrical, etc.

Exports target

India on track to achieve overall exports target of $400 billion and engineering exports target of $107 billion Engineering exports crossed the $100 billion mark in the last 11 months and achieved 92 percent of the total target.

Engineering exports target for April-February 2021-22 ($ billion)

Figure1: Region-wise shares of engineering exports, April-February 2021-22

Figure2: Trend of rupee vis-à-vis dollar from April 2020 (monthly average rate)