Indian exporters See limited gains from Rupee depreciation
Indian exporters of garments, handicrafts, and engineering goods expect 5-10% gains from the rupee’s depreciation, but more import-dependent sectors such as gems and jewellery and electronics see rising oil and commodity prices offsetting any benefits, trade insiders said.
Moreover, the sharper depreciation of the Chinese yuan, Japanese yen, and Mexican peso against the US dollar may prompt buyers to pressure Indian exporters to pass on the gains, besides undermining any long-term competitive advantage from the rupee’s fall, they said.
The rupee hit an all-time low of 85.09 per dollar on Thursday, crossing the 85 mark for the first time. On Friday, the rupee hit a new low of 85.10/$1. Almost 60% of India’s goods trade is in dollars, and the depreciation will help traditional sectors such as textiles and leather.
“The rupee depreciation will help the entire textile chain, and the benefit is usually 50% of the depreciation. The rest of the benefit gets passed on to the buyers,” said Sanjay Jain, managing director of TT Ltd, an exporter of readymade garments.
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