India's engineering goods exports climbed 20.91 per cent year-on-year to $12.17 billion in September 2026, clocking the sixth consecutive month of double-digit growth, according to industry body EEPC India. Robust demand from the United States, the United Kingdom, China, and South Korea drove the headline surge, even as logistics disruptions in West Asia weighed on Gulf shipments.

Key Drivers of Growth

The expansion was broad-based: 30 of 34 engineering product panels recorded year-on-year growth. Top contributors included copper and copper products, iron and steel, electrical machinery and equipment, aluminium products, and two- and three-wheelers. Only four panels — office equipment, machine tools, lead and products, and zinc and products — posted year-on-year declines.

US Leads Despite Tariff Headwinds

Shipments to the United States surged 55.7 per cent year-on-year to $2.19 billion in September, remaining the single largest destination for Indian engineering goods both for the month and across the April–September 2026 period. Notably, this growth came despite punitive tariffs on iron and steel and aluminium, suggesting India's competitive positioning has strengthened in those categories.

Exports to China rose 42 per cent to $430.1 million. Oman also emerged as a bright spot, with shipments climbing 59 per cent to $136.3 million, reportedly buoyed by the India-Oman free trade agreement that took effect in June 2026.

Gulf Markets Drag, Structural Deficit Widens

Not all markets followed the upward trend. Exports to the UAE fell 4.5 per cent while shipments to Saudi Arabia declined a sharper 26.2 per cent, both attributed to continued regional tensions and logistical disruptions along West Asia trade routes.

More critically, the strong export headline masked a widening trade gap. Engineering imports rose 12.3 per cent to $15.6 billion in September, leaving a $3.43 billion engineering trade deficit. Pankaj Chadha, Chairman of EEPC India, flagged this directly: 'India's September 2026 performance, while commendable, exposes structural vulnerabilities.'

Chadha noted that the import surge reflects both rising domestic investment and continued dependence on North East Asian and European supply chains, which together account for over 62 per cent of India's engineering imports.

What the Industry Is Calling For

EEPC India has urged Indian manufacturers and policymakers to reduce import intensity in precision machinery and components, diversify supply chains away from concentrated geographic suppliers, and address market-specific frictions — including the Carbon Border Adjustment Mechanism (CBAM) in Europe, rising global protectionism, and West Asia's logistics disruptions. This comes amid a broader policy push to position India as a global manufacturing hub, making the structural import dependence a pressure point that cannot be deferred.