India’s engineering and electronics exports have shown robust growth, reaching record levels despite global challenges. Engineering goods exports hit an all-time high of $116.67 billion in FY25, accounting for 26.67% of India’s total merchandise exports. While the US remains the largest destination, European markets play a critical role, albeit with mixed performance.

India’s Share in European Markets

Engineering Goods

EU Share: The EU accounted for 17.1% of India’s engineering exports in FY25, valued at approximately $19.95 billion. However, exports to the EU declined by 1.9% year-on-year, reflecting challenges like regulatory barriers and competition.

Key Markets:

Netherlands: A strategic logistics hub for European distribution, hosting over 1,000 international companies.

UK: Post-Brexit, the UK’s electronics market is projected to reach $62.18 billion by 2030, with e-readers and smart home devices driving growth.

Electronics

Semiconductors: India’s semiconductor exports to the EU face structural challenges, including limited fabrication capabilities and compliance with EU standards.

UK Opportunities: Indian electronics exports to the UK must meet post-Brexit requirements like UK EORI numbers and SPIRE registrations.

Steps to Increase India’s European Market Share

1. Negotiate a Comprehensive India-EU Free Trade Agreement (FTA)

Tariff Reduction: The EU seeks lower tariffs on automobiles (currently 100–150%) and alcoholic beverages, while India demands better access for pharmaceuticals and IT services.

Regulatory Alignment: Streamline compliance with EU standards (e.g., CE marking) and address non-tariff barriers like the Carbon Border Adjustment Mechanism (CBAM).

2. Strengthen Semiconductor Ecosystem

Fabrication Plants: Establish advanced semiconductor manufacturing units via partnerships under the Semicon India program.

R&D Collaboration: Joint ventures with EU academic institutions and firms (e.g., NXP Semiconductors) for AI, IoT, and 5G technologies.

3. Diversify Export Markets Within Europe

Target Growth Regions: Focus on countries like Romania, Czech Republic, and Netherlands, where Indian exports grew robustly in 2023.

Leverage Logistics Hubs: Utilize the Netherlands as a gateway for re-exports to other EU nations.

4. Address Compliance and Technical Barriers

Skill Development: Train SMEs in EU regulatory requirements (e.g., REACH regulations for chemicals).

Public-Private Partnerships (PPPs): Collaborate with organizations like the Europe India Centre for Business and Industry (EICBI) to navigate trade impediments.

5. Promote Sector-Specific Strategies

Engineering Goods: Focus on high-growth segments like renewable energy equipment and automotive components, leveraging the EU’s green transition initiatives.

Electronics: Capitalize on the UK’s Get Help with Technology Program, which distributed 1.35 million devices to schools, creating demand for tablets and laptops.

Challenges and Quotes

1. EEPC India Chairman Mr. Pankaj Chadha emphasised that engineering exports succeeded despite “geopolitical disturbances and economic slowdowns”.

2. The EU’s CBAM and stringent environmental norms risk increasing costs for Indian steel and aluminium exports, necessitating proactive adaptation.

Finally, by prioritising FTAs, technology partnerships, and market diversification, India can elevate its European market share. Strategic alignment with EU policies and targeted investments in R&D will be pivotal in overcoming current barriers.

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Source:
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