Business — 27 February 2014

Why Do Indian Exporters Hate the Rupee

There are many countries that have been treating their plunging currency as an opportunity. However, it is not the case when Indian exporters are in question. Indian exporters are of the opinion that a fall in the rupee price would not do much about the improvement in trade deficit. It does not actually support India’s economic conditions, but instead aggravates currency problems. A dropped value of the rupee against the dollar has only stressed Indian exporters. They have started planning on ways to handle such a dynamic nature of the rupee.

Indian exporters feel that a cheaper currency is not going to make them more competitive. As against this, the falling rupee value is only widening trade deficit. The plunging currency is also indicative of narrowed down markets on a global level. While exports have been declining, Indian imports have been constantly increasing. In addition, a large part of Indian import items is usually inflexible. While exports have been decreasing, inelasticity in imports is only widening the gap between imports and exports. According to exporters, a broader picture of Indian trades is only showing increasing deficits. Thus, it is basically straining the payments balancing system.

Additionally, there are a lot of raw materials that are imported in India. This further affects the situation of exports, as these raw material imports are done for key contents exported out of the country. When key export drivers have been facing an impact, even the depreciating rupee value cannot add to boost up Indian exports. Although many export products can be manufactured at a lower price when the currency value goes down, the increasing imports to support manufacturing processes do not leave a scope for the balance of payments. Thus, such major reasons affecting the export market have been making Indian exporters hate the rupee.


About Author

Anupam Jolly

With a bachelor’s degree in technology and over five years of experience in online content generation and distribution, Anupam Jolly has been creating and editing content spanning across a variety of domains. An avid environmentalist, Anupam Jolly believes that if humans can degrade the environment, they can save it from disaster too.

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