India is taking its export capabilities to new heights, with the engineering sector emerging as one of the biggest drivers of economic growth. Over the past decade, the sector has made remarkable progress and has become the largest contributor to the country’s merchandise exports. Despite global economic uncertainties, supply chain disruptions, and geopolitical tensions, the resilience of India’s engineering industry reflects the country’s growing manufacturing capabilities and global competitiveness.
Let us understand India’s engineering exports boom in detail and explore whether this theme could become a significant opportunity for investors.
What’s Happening?
India’s engineering exports reached a record US$122.43 billion in FY25–26. This marks an increase of nearly 75% from approximately US$70 billion in FY14-15. The engineering sector now contributes around 28% of the country’s total merchandise exports, making it India’s largest export segment.
According to Vimal Anand, Joint Secretary in the Department of Commerce, this achievement over the past 12 years reflects the growing strength, competitiveness, and resilience of India’s manufacturing ecosystem. Indian engineering products are no longer confined to traditional markets but have also established a strong presence across North America, the European Union, and other developed economies.
Major Reasons Behind the Record Performance
Both the government and the industry have played a crucial role in driving the rapid growth of engineering exports. The government has consistently engaged with exporters and industry bodies to address challenges and improve export competitiveness.
Initiatives such as the Market Access Initiative (MAI) Scheme, Brand India Engineering Campaign, Production Linked Incentive (PLI) Scheme, National Single Window System, Quality Control Orders, and One District One Product (ODOP) have significantly strengthened India’s export capabilities.
The impact of these efforts is clearly visible in the export data. Engineering exports have reached record levels for three consecutive years. They stood at US$109.3 billion in FY23–24, increased to US$116.67 billion in FY24–25, and further rose to US$122.43 billion in FY25–26.
According to Pankaj Chadha, Chairman of EEPC India, a strong domestic economy and targeted government interventions have helped the sector maintain its growth momentum.
Export Strength Remained Intact Despite Challenges
This achievement comes at a time when the global economy has been facing multiple headwinds. Geopolitical tensions, supply chain disruptions, slower growth in developed economies, tight financial conditions, and currency fluctuations have all weighed on global trade.
Despite these challenges, Indian exporters demonstrated strong adaptability. Effective coordination between the government and industry helped minimise the impact of disruptions caused by tensions in West Asia and logistical bottlenecks.
The government’s RELIEF scheme also helped reduce the burden of rising logistics and insurance costs. Regionally, Western India made the largest contribution in FY26, accounting for nearly 39% of total engineering exports, or approximately US$47.5 billion.
What Does This Mean for Investors?
The strong growth in engineering exports is not just a trade success story; it also has a direct impact on economic activity, employment generation, and industrial investment.
The government has recently allocated Rs 25,060 crore for the Export Promotion Mission, aimed at making Indian exporters more competitive in global markets. Additionally, Free Trade Agreements (FTAs) signed or under negotiation with the UK, EU, UAE, Australia, and EFTA countries could create new opportunities for Indian engineering companies.
Schemes such as the PLI programme are also helping boost domestic manufacturing capacity, enabling engineering companies to expand production and cater to growing global demand.
What’s Next?
In the coming years, India’s focus is expected to remain on strengthening its export-led growth strategy. The government continues to work towards expanding market access, reducing trade barriers, and integrating Indian companies more deeply into global value chains.
Free Trade Agreements with the UK, EU, UAE, Australia, and EFTA countries could further improve the competitiveness of Indian engineering products. At the same time, ongoing improvements in manufacturing and logistics infrastructure are likely to enhance the cost efficiency of Indian exporters.
While risks such as a global economic slowdown, geopolitical tensions, and supply chain disruptions have not completely disappeared, strong policy support, diversified export markets, and the adaptability of Indian industry provide encouraging signals for the sector’s long-term growth prospects.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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