Market diversification and policy momentum: Driving India’s $250-billion engineering export ambition

Engineering export stands at a crucial turning point. The global trade environment is in a phase of transition owing to shifting supply chain dynamics and the emergence of new growth corridors across the Global South. And that sets the stage for market diversification for the engineering exports at a time when the government has set a target of $1 trillion in exports, which includes $250 billion from the engineering sector by 2030. In fact, market diversification supported by enabling policies and robust financial mechanisms holds the key when it comes to driving growth and realising India’s engineering export ambitions.

Steady growth amid global headwinds

Despite downside risk in the global trade, engineering exports have shown steady and positive trends so far. According to data released by the Engineering Export Promotion Council of India (EEPC), India’s engineering goods exports increased 2.93% year-on-year to $10.11 billion in September 2025. The resilience in engineering exports amid the challenging scenario demonstrates the inherent strength of the sector. It is also a result of market diversification. Shipments to emerging regions such as Sub-Saharan Africa, ASEAN, and Latin America have increased. On the other hand, long-standing partners like the U.K., Germany, and Japan continue to generate healthy demand.

The growth in trade to Sub-Saharan Africa, ASEAN reiterates UNCTAD’s observation that South–South trade is becoming a key driver of global trade. For India, this opens an important window of opportunity to strengthen trade linkages within the Global South and simultaneously expand its footprint across developed markets.

Market diversification

Market diversification has become a strategic priority. The ‘U.S.+Many’ approach mandates India to maintain export links in the U.S. market while systematically developing alternative markets across geographies. Latin America, for instance, is a lucrative market. Moreover, countries such as Mexico, Chile, and Peru are emerging as strong growth hotspots for engineering goods. With India in Free Trade Agreements (FTAs) discussions with Chile and Peru, and potential trade engagement with Mexico on the anvil, things are moving in the right direction to strengthen its export alliance in these major Latin American countries. In addition, the ongoing dialogue with EU trade negotiators to finalise the FTA builds the prospect of unlocking access to advanced markets, initiating technology collaborations, and boosting the competitiveness of the country’s engineering exports. The phase of intensifying synergies in key geographies will amplify engineering exports and insulate them from market volatility or any geopolitical developments.

The crucial pillar

Having said that, diversification needs domestic policy support. Measures such as enhanced export credit facilities, interest subvention for exporters, and revised duty drawback schemes are essential to help the sector neutralise tariff shocks and other global challenges. Such policy interventions will further give an edge in the global markets and ensure that Indian engineering products continue to meet global standards of quality, innovation, and sustainability.

The diversified export outlook and a conducive policy framework will set things up for India’s engineering exports. Another critical aspect is to climb the value chain and increase the share of high-end technology-driven and R&D-focussed goods in the engineering exports basket. Boosting technology-rich engineering goods will further strengthen export resilience and global demand. It is about time to move from volume-driven to value-driven exports. There is an urgent need to switch from cost efficiency to capability leadership. The engineering export sector, which already contributes over a quarter of the total merchandise exports, is set to enter a new growth cycle on the back of diversification, innovation, and resilience. Industry, government, and trade bodies need to come together to usher in the next wave of growth.

(The author is Chairman and Managing Director, Balu Forge Industries Ltd. Views are personal.)