Whenever India’s exports are discussed, the engineering sector is rarely discussed. The reality is that this sector alone accounts for 27 to 28 percent of the country’s total exports. It accounts for about 40 percent of the total manufactured goods sent out of the country. This includes steel, metal goods, machinery, vehicles, auto parts, defense equipment and aircraft parts. Due to the lack of dominance of any single industry, the sector stays out of the headlines. But despite heavy tariffs imposed by the American administration in the last one year, the sector has written the most spectacular comeback story.

When the US imposed 50 per cent additional tariffs in September-October last year, Indian engineering exports suffered a double-digit decline. But Indian industrialists took over the situation very quickly. Exports to the US rose 15.5 percent to $9.97 billion between April and August this year. There was a jump of 31 percent in the month of August alone.

Indian companies have a strong hold in the American supply chain

Even a 50 percent tax on steel and aluminum products could not stop the pace of Indian exports. Steel forging exporter Avinash Gupta says this 50 percent duty is applicable to all countries. In such a situation American buyers have no other option but to accept it. Due to this, there is little difference in their purchasing power.

According to Arun Kumar Gadodia, managing director of Corona Steel and former chairman of the Engineering Export Promotion Council (EEPC), once companies are established in the American supply chain, it is not easy to replace them. Unless another country offers the goods at a very cheap price, consumers do not switch their supplier. This is because establishing a new supply system and logistics is a very difficult task. Under Section 232 of the American Trade Expansion Act of 1962, a 50 percent tariff was also imposed on auto parts and copper products, but there was no reduction in demand for Indian goods.

Traders bear losses to protect the market

Mutual understanding between Indian suppliers and American customers played a major role in this success. Both parties continued the business even after suffering a temporary loss in profits. Pankaj Chadha, chairman of EEPC and managing partner of Jyoti Steel Industries, says that there is a steady demand from the US. This momentum of last five months is expected to continue further. While the 50 percent tariff was in effect from late August 2025 to early February 2026, Indian exporters also sent goods at a discount to protect their market.

SC Relhan, president of the Federation of Indian Export Organizations (FIEO) and MD of Shree Tools, says many Indian industrialists shared the 50 percent tariff burden with American buyers. In some cases, the goods were even shipped at a loss to stay in the American supply chain. Now that the process of refunding these tariffs has started in the US, Indian exporters are hoping that the American importers will give them a portion of the refund as promised. However, this process of getting refund is still very slow.

Expanding into new markets from China to Europe

The sector has gained huge support not only in America but also in other markets of the world. Total global exports of the engineering sector increased by 4.9 percent to $122.43 billion. During FY 2025-26, Indian exports to the Chinese market have increased by 32.4 per cent, to Britain by 18.2 per cent, to Italy by 16 per cent and to Germany by 14.6 per cent. Apart from this, double digit growth has also been recorded in Korea, Japan, Brazil and the Netherlands.

Indian businessmen are now expanding their penetration into the markets of Europe, Britain and Canada. India has received a special quota of 19 lakh tonnes from the European Union (EU) for steel products. Goods shipped within this limit are subject to zero duty, while exports beyond this limit are subject to a 50 percent tariff.