Rupee Fall to Help Exports Rise by up to 10%

Indian exporters of carpets, handcrafts and engineering goods expect up to 10% benefit from the ongoing rupee depreciation.

Sectors with a low dependence on imports stand to gain while others will lose their benefits to higher oil and commodity prices, they said.

The rupee has shed almost 3.5% against the US dollar this year and 3.2% since Russia’s military operations in Ukraine on February 24. It fell to a record 77 against the dollar on Tuesday. Oil prices have soared to the highest, about %139 per barrel, since 2008 amid the Russia-Ukraine conflict.

“A weak rupee is only a temporary relief and not a long-term benefit because iron and steel prices have gone up 60% in the last two months. However, we expect a 4-5% rupee depreciation to translate into a 10% growth in exports if the raw material prices don’t increase further,” said Ravi Sehgal, managing director of Kolkata-based engineering firm Carnation Industries Ltd.

“Higher metal and oil prices will get neutralized by a depreciating rupee. We expect a 2-3% growth in exports,” said Rakesh Kumar, director general, Export Promotion Council for Handicrafts.

India’s merchandise exports in April-February 2021-22 were $374.05 billion, up 45.8% year-on-year while imports rose 59.21% to $550.12 billion. As per Sidh Nath Singh, director of Mirzapur-based Carpet Handicrafts Export, woollen carpets have a 10-12% dependence on imported wool and dyes, and the amount of rupee depreciation is directly proportional to the export gains.

“While exports do get a push from a weaker rupee, the benefit gets reversed by rise in the transportation and import costs. We import raw materials such as hides and chemicals which are essential for footwear,” said Rafeeque Ahmed, chairman of Farida Group, one of India’s largest shoe manufacturers and exporters.

Ahmed said that most exporters have hedged contracts beforehand and for them, any change in the exchange rate makes no difference.


A weaker currency makes US dollar-denominated imports like raw materials such as Sulphur, ammonia and potash more expensive and large firms that are net exporters tend to benefit from currency depreciation but small and mid-sized companies which rely on imported bulk drugs from China might get impacted adversely.

“Almost 60% of our goods trade is in dollars and the depreciation will help our traditional sectors such as textiles and leather but the benefit will be limited for gems and jewellery, and electronics, which are import-intensive,” said Ajay Sahai, director general, Federation of Indian Export Organizations.

Textile exporters have begun receiving queries from buyers to cut prices for fresh orders. “Our orders from Europe are being deferred and there are issues related to shipping also. And many buyers want us to pass on the benefits of a weaker rupee to them,” said a Delhi-based garment exporter, who did not wish to be identified. 

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