India's Diplomatic Rift With Türkiye, Bangladesh Hit Engineering Exports?

2026-05-09 02:05:13

(MENAFN- KNN India) New Delhi, May 9 (KNN) India's cold shoulder to Türkiye following its open support to Pakistan during Operation Sindoor and strained relation with Bangladesh after students-led uprising led to ouster of the then prime minister Sheikh Hasina seem to have some bearing on bilateral trade with the two countries.

Engineering goods which account for nearly 28% of India's total merchandise exports fell sharply to both Türkiye and Bangladesh even as total exports remained in positive territory during the financial year 2025-26.

As per EEPC India, engineering exports to Türkiye plummeted 35.6% year-on-year in fiscal 2025-26 to USD 1959.22 million as compared to USD 3044.60 million in the previous year.

In the case of Bangladesh, engineering exports to the neighbouring country fell 12.2% year-on-year to USD 1919.79 million as compared to USD 2187.61 million.

EEPC India attributed the slide in exports to Bangladesh to their recent tax reforms whereby it has withdrawn the existing import duties on steel raw materials and replaced it with a combination of VAT and Advanced Income Tax (AIT). The move has increased the effective tax burden on manufacturers using imported steel for further processing by upto 40%. Even in cases of products with zero customs duty, the additional duties increased the cost burden.

Notably, both Türkiye and Bangladesh are among the 25 major destinations for India's engineering exports.

Another key destination, Mexico, also saw fewer engineering shipments from India during FY26. EEPC India said that the fall in exports to Mexico was not only due to the logistics issues but also due to their recently announced trade reforms under which tariffs on over 1,400 products rose sharply-ranging from 5% to 50%-for imports from countries without a Free Trade Agreement (FTA) with Mexico effective from 1st January 2026.

India's engineering exports hit all-time high in FY26 to USD USD 122.43 billion as against USD 116.75 billion in the previous fiscal, registering a growth of 4.86%. The ongoing West Asia conflict has however been weighing on India's exports since March this year and engineering exports have also been impacted.

(KNN Bureau)

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