Russia’s Engineering Imports From India Triple In 2023
Russia’s search for engineered products as alternatives to those previously sourced from the West have seen a huge jump in Indian imports. India’s exports to CIS countries have also shown a sharp increase, according to the Indian Engineering Exports Promotion Council (EEPC).
Engineering exports to Russia almost tripled in June 2023 and stood at US$116.9 million. In cumulative terms, exports jumped four-fold during the April-June period of the current financial year to US$337.4 million, from US$89.7 million in the same period in 2022, the EEPC noted.
Engineering shipments to CIS countries, which, apart from Russia, include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, and Uzbekistan, jumped by 161.2%.
Major engineering products exported by India include iron and steel, zinc, tin products barring copper, nickel and lead products, industrial machinery, and parts, two and three wheelers and auto components, and tires.
The Russia / CIS increases are against the overall, Indian global trend, with the countries engineering exports falling for the third straight month in June this year; at about US$8.53 billion, a decrease of 11% less than the same month in 2022. Exports to key markets declined over the year – by 12.5% to the US, by 16.2% to the EU, and by 20% to China. Russia’s importance to India’s engineering products has therefore increased.
“It is the metal sector that has been the most significant contributor to the decline. This has been a result of weakening global demand. The latest news has indicated that global demand for steel weakened further with slower offtake from China’s construction sector,” EEPC India Chairman Arun Kumar Garodia said.
He added that similar concerns, including the banking crisis in the US, have also affected the demand and price of copper, aluminum, lead, and zinc, which has affected India’s exports to its major partners, including the US, EU countries, and China. The situation is expected to further worsen with the implementation of the EU’s Carbon Border Adjustment Mechanism, he noted.
At the same time, Garodia said, India’s exports to countries with which it has signed free trade agreements, particularly the UAE and Australia, have increased since the signing of the deals.
He suggested that having more comprehensive free trade agreements with potential partners will be the right step for India to achieve its goal of US$2 trillion in exports by 2030. India has signed 13 regional trade agreements and free trade agreements with Japan, South Korea, countries of the ASEAN region, and countries of the South Asian Association for Regional Cooperation, Mauritius, United Arab Emirates, and Australia, the government announced last year.
Russia and India are both part of the BRICS group as well as full members of the SCO. India is also currently negotiating a Free Trade Agreement with the Eurasian Economic Union (EAEU) which includes Russia along with Armenia, Belarus, Kazakhstan and Kyrgyzstan. When agreed, this can be expected to further increase India’s industrial sectoral exports to Russian and the EAEU / CIS nations.
Dezan Shira & Associates assist Russian and other foreign investors into India and have three offices in the country. We provide market intelligence, legal, tax and corporate support services. For assistance, please contact india@dezshira.com
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During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.
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