Live Events
as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now!
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
The rupee's fall to a record low of 93.86 against the dollar may offer a modest competitive edge to exporters, but rising input costs are likely to offset the gains, industry executives said.The depreciation could support exports of textiles, leather, agro products, carpets, handicrafts and some engineering goods.Almost 60% of India's goods trade is in dollars and the depreciation will help traditional sectors such as textiles and leather that have low dependence on imports."A rupee level of ₹93.86 provides a modest competitive edge to Indian exports by improving price realisation, especially in sectors like textiles, leather, agro products, carpets, handicrafts and some engineering goods," said Ajay Sahai, direct general, Federation of Indian Export Organisations . "It can support margins or market share in price-sensitive markets."However, the benefits are partly offset by higher import costs, especially for sectors reliant on imported inputs such as electronics, petroleum, gems & jewellery and chemicals, along with a rising crude bill and inflationary pressures "There could be a small benefit but not a substantial one. We expect a 20% year-on-year decline in goods in March as 16% of our exports, which are to the Middle East, are hit," said Pankaj Chadha, chairman, EEPC India. "Input prices of scrap and energy have increased, which are creating a problem in running furnaces."Industry estimates suggest only about 15% of exporters are unhedged and may see gains from the rupee's decline."Overall, it is mildly positive in the short term, but not a game-changer, as structural factors remain far more critical for export growth," said a representative of an export promotion agency.Exporters also flagged additional pressure from a reduction in rates and value caps under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, except for agricultural and processed food products. The government restored the benefits on Monday."It is logically positive but practically every input is up by 10-50% so overall things are still bad. These 1-2% will just reduce the pain," said Sanjay Jain, managing director, TT Limited.The rupee's depreciation comes as India's merchandise exports fell 0.81% to $36.61 billion in February. The government expects March to be a challenging month for outbound shipments. "Only in-transit shipments can have short-term benefits from the rupee depreciation otherwise imports such as dyes, chemicals and wool get expensive, and electricity and diesel or petrol used in washing, adds to the cost," said Mahavir Sharma, founder of Oscar Expo Design LLP, a Jaipur-based exporter of wooden furniture, carpets and silver jewellery.