In Focus by The Hindu Can India’s Factories Survive America’s Tariff War?
Sep 17, 2025
Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India, dives deep into the effects of U.S. tariffs on Indian factories. He highlights the struggles faced by engineering firms and small enterprises, emphasizing idle machines and the stress on exporters. The conversation touches on evolving trade conditions, including the need for strategic adaptation and potential government support. Chadha also discusses navigating new markets and the urgent challenges posed by geopolitical tensions, offering insights into India's economic future.
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Engineering Sector's Economic Scale
- India's engineering exports are vast, covering everything from small pins to aircraft carriers and contributing ~7-8% of GDP.
- MSMEs drive this sector, supplying about 50% of engineering exports and 70% of EEPC members.
Tariff Layers Hitting Engineering Exports
- Multiple U.S. tariffs now hit Indian engineering goods: sectoral Section 232 tariffs and reciprocal tariffs raised to 50%.
- That 50% rate creates a roughly 30% disadvantage versus other exporters at ~19-20% tariffs.
Shifting To South American Markets
- Exporters are actively trying to "de-risk" by seeking alternative markets like South America and Mexico.
- EEPC is asking government to expedite FTAs with Chile, Peru and Mexico to ease market shifts.