Exporters’ Feast, Importers’ Famine
Rupee near record lows: A Boon for Exporters or a Burden on Importers?
The Indian rupee traded near record lows against the US dollar on Tuesday, slipping to ₹88.15 after closing at an all-time low of ₹88.18 the previous day. While the depreciation has boosted exporters’ price competitiveness, it has simultaneously raised concerns for import-heavy sectors that rely on costly foreign inputs.
Exporters Walk a Fine Line
Exporters have described the current scenario as a mixed bag. On one hand, the weaker rupee makes Indian goods more attractive in global markets, improving price competitiveness—especially as exporters increasingly diversify beyond the United States.
However, the benefits are not uniform. For industries with significant import dependence—such as gems and jewellery, petroleum products, and electronics—higher costs of imported raw materials could offset the currency advantage, eroding profit margins.
The government has already urged exporters to expand into new markets, particularly as Washington’s proposed 50% tariffs on Indian goods threaten shipments to the US. With America accounting for about 20% of India’s total exports ($86.5 billion in FY2024-25 out of $437 billion), diversification is no longer optional but essential.
Experts believe the rupee’s weakness could be leveraged to push for greater domestic value addition, reducing import intensity and creating a more sustainable export growth model.
Importers Bear the Brunt
For importers, the impact of a sliding rupee is immediate and painful. “The primary and immediate impact of a depreciating rupee is on importers who will have to shell out more for the same quantity and price. However, it is a boon for exporters as they receive more rupees in exchange for dollars,” said a trader on condition of anonymity.
India’s heavy reliance on imports makes the economy particularly vulnerable. The country sources 85% of its crude oil needs from abroad, leaving petroleum products exposed to rising costs. Other major imports include coal, chemicals, plastic materials, electronic goods, vegetable oil, fertilisers, machinery, gold, and precious stones. Beyond trade, overseas education and foreign travel are also expected to get expensive for Indian households.
A market expert noted that while exporters and importers can adapt, stability is key. “Any volatility in the rupee is disruptive for both sides. A level closer to 85 would be more comfortable,” the expert said.
Why the Rupee is Weakening
The rupee’s recent decline has been attributed to multiple factors, including:
- Uncertainty over the Indo-US trade deal
- Capital market outflows
- Weak domestic equity performance
- Tariff concerns and global risk aversion
With risks skewed to the downside, forex traders caution that further depreciation cannot be ruled out.
The Trade Balance Picture
Despite the currency pressure, India’s exports showed resilience, snapping a two-month decline with a 7.29% rise to $37.24 billion in July. However, the trade deficit widened to an eight-month high of $27.35 billion.
During April–July 2025-26, exports rose 3.07% to $149.2 billion, while imports increased at a faster pace of 5.36% to $244.01 billion, leaving a trade deficit of $94.81 billion.
Bottom Line
The rupee’s weakness is both an opportunity and a challenge. Exporters may enjoy enhanced competitiveness, but import-heavy industries face squeezed margins as input costs surge. The path forward will depend on how effectively India can diversify its export markets, boost domestic value addition, and maintain macroeconomic stability in the face of global headwinds.
