Indian rupee slipping below the record 88 level against the US dollar will enhance price competitiveness of Indian products in global markets and help exporters diversify beyond the US market, say exporters.
Photograph: Kind courtesy Rupixen/Pixabay
However, import-dependent sectors such as gems and jewellery, petroleum and electronics may see lower benefits due to a rise in input costs, they stated.
The rupee breached a record low level of 88 against the US dollar on Friday last week and hit an all-time closing low of 88.18 to a dollar on Monday.
The rupee traded near record levels at 88.15 to a dollar on Tuesday as well. A weaker rupee increases the price realisation of exported products but makes imported products costlier.
Exporters said that the rupee’s depreciation provides a mixed picture for exports.
“On one hand, it enhances the price competitiveness of Indian products in global markets, particularly as exporters diversify beyond the US.
“On the other hand, for sectors with high import dependence such as gems and jewellery, petroleum products, and electronics, the cost of imported inputs will partly offset the currency advantage, squeezing margins,” Federation of Indian Export Organisations (FIEO) director general Ajay Sahai said.
The government is suggesting that exporters, who are dependent on the US, diversify their shipments as 50 per cent tariffs on Indian goods by America may impact Indian exports to that country.
The US accounts for about 20 per cent of India’s exports.
It was $86.5 billion in 2024-25 out of total exports of $437 billion.
He added that the opportunity lies in leveraging the currency to deepen presence in emerging markets while simultaneously pushing for greater domestic value addition to reduce import intensity and ensure sustainable export growth.
Another trader said that the development would make imports of items from crude oil to electronic goods, overseas education and foreign travel costlier.
The primary and immediate impact of a depreciating rupee is on the importers who will have to shell out more for the same quantity and price.
However, it is a boon for the exporters as they receive more rupees in exchange for dollars, the trader, who does not wish to be named, said.
India is 85 per cent dependent on foreign oil to meet its needs for fuels, such as petrol, diesel and jet fuel.
The rupee has declined to an all-time low against the US dollar as Indo-US trade deal uncertainty, forex outflows from capital markets and weak domestic equity markets pressured the local unit.
Forex traders said the rupee is trading near all-time low levels as risks remained skewed to the downside amid uncertainty over US trade tariffs.
The basket of Indian imports includes crude oil, coal, plastic material, chemicals, electronic goods, vegetable oil, fertiliser, machinery, gold, pearls, precious and semi-precious stones, and iron and steel.
Kanpur-based Growmore International Ltd MD Yadvendra Singh Sachan said that a balanced rupee value helps both exporters and importers.
“Any volatility in the value is not good for both. At the current scenario, 85 will be better,” Sachan said.
Snapping the two-month declining streak, India’s exports rebounded by 7.29 per cent to $37.24 billion in July, while trade deficit widened to an eight-month high of $27.35 billion during the month.
During April-July 2025-26, exports increased by 3.07 per cent to $149.2 billion, while imports rose 5.36 per cent to $244.01 billion.
The trade deficit during the first four months of 2025-26 was $94.81 billion.
