Indian engineering exporters seek tariff cuts to offset US duties

India's small engineering goods exporters have urged the government to reduce import tariffs on select US products in a bid to secure more favourable trade terms, as the United States prepares to implement new steel and aluminium duties.

The move comes in response to concerns over potential declines in orders and increased costs following the imposition of 25 per cent tariffs on steel and aluminium imports by the US, effective 12 March.

According to a Reuters report quoting Pankaj Chadha, chairman of the Engineering Export Promotion Council (EEPC), representing over 10,000 small exporters, the tariffs could impact nearly $7.5 billion worth of India's annual $20 billion engineering goods exports.

The EEPC, along with other industry chambers, has called on the government to lower tariffs on certain US imports that have minimal inbound shipments. This measure, they believe, could encourage the US administration to offer better trade terms and advance discussions on a proposed bilateral trade agreement.

President Donald Trump has previously criticised India as a high-tariff nation and has warned of imposing “reciprocal tariffs” starting in early April. In light of this, Commerce Minister Piyush Goyal is currently in the US for negotiations aimed at securing potential tariff reductions while evaluating the implications of the proposed American duties.

Industry experts suggest that India could reduce import duties on US steel scrap from 7.5 per cent to nearly zero and lower tariffs on products such as nuts, castings, and forgings. Additionally, concessions on select agricultural and manufactured goods could be considered as part of the broader trade discussions.

Exporters are also concerned about India's proposed safeguard duty of up to 14 per cent on steel imports, which is intended to protect domestic producers from cheaper Chinese alternatives. They fear that such a measure could escalate local steel prices, further straining profit margins.

Despite the looming tariff concerns, India’s engineering goods exports to the US saw an 18 per cent year-on-year increase in January, reaching $1.62 billion, outpacing the sector’s overall 7.44 per cent growth. Between April 2024 and January 2025, engineering exports to the US recorded a 9 per cent annual rise to $15.6 billion, driven by higher shipments of aircraft parts, electrical machinery, automobiles, industrial machinery, and medical instruments.

"The engineering industry is facing significant challenges, and the latest U.S. tariffs add further pressure. Continued government support in export credit and technology is crucial for maintaining competitiveness," Chadha emphasised.

Overall, India’s global engineering exports, which contribute nearly a quarter of the country’s total merchandise exports, climbed to $9.42 billion in January, up from $8.77 billion in the same month last year. However, the figure was lower than December’s $10.84 billion. Cumulative engineering exports for the April-January period increased by 9.82% year-on-year, reaching $96.75 billion, according to EEPC data.

As trade negotiations continue, exporters remain hopeful that a balanced approach will help mitigate the impact of tariffs and ensure sustained growth in the sector.