India’s engineering sector posts record high exports in March; supply to middle east plummets

Exports to the UAE and Saudi Arabia plummeted by 66.8% and 45% respectively during the month, according to the latest data from the Engineering Export Promotion Council (EEPC).

The drop is primarily attributed to the halt in cargo movements through international waters, particularly around the Strait of Hormuz and the Red Sea. Despite this regional turbulence, India’s overall engineering sector managed to end the fiscal year on a historic high.

The March shock: UAE and Saudi Slump

The conflict in West Asia has hit India’s second and fourth largest engineering markets hard. The logistical “logjam” in the Persian Gulf has made shipments to the region both expensive and risky.

• UAE: Exports fell to $237.4 million in March 2026, down from $714.8 million a year ago.
• Saudi Arabia: Shipments declined to $247.7 million, compared to $450.5 million in March 2025.
• Annual Impact: For the full fiscal year (FY26), exports to the UAE and Saudi Arabia are down 10% and 13% respectively.

FY26: A record-breaking year

While March was a difficult month for the Middle East corridor, the engineering sector as a whole demonstrated remarkable resilience. In FY 2025-26, total engineering exports hit $122.43 billion—the highest ever recorded. This represents a 4.86% growth over the previous year.

The sector now accounts for over 28% of India’s total merchandise exports. This growth was driven by high demand for motor vehicles, copper products, iron and steel, and industrial machinery.

Product highlights: Winners and losers

The “record high” was led by a surge in exports of automobiles (cars, two-, and three-wheelers), electrical machinery, and auto components. However, not all segments fared well. The ‘aircraft and spacecraft parts’ and ‘medical instruments’ sectors saw a decline in outbound shipments during the fiscal year.