Exports to witness a further push with decline in rupee

Manishika Miglani

There may be good news for exporters in the country with rupee recently hitting a record low of 68.86 against the US dollar (USD).  This is expected to give further push to the rebound in exports India witnessed in the month of October.

Echoing the same emotion, Vinay Aggarwal, Director, Kalakriti Exports, said, “The declining of rupee is definitely increasing the exports as we are becoming cheaper to other countries.  The potential of exports is increasing."

On being asked about the expenses incurred by the textile industry on account of imports, Aggarwal said, “This is not a point of concern as the expenses we incur on imports gets compensated with the exports we do. The import cost gets balanced by the sale price. If we are exporting and importing at the time, then there is not much of a difference.”

HKL Magu, Managing Director, Jyoti Apparels also sees no major impact on the textile industry as a result of the rupee falling down . “The products that we use for production of garments are mostly indigenous, so we can only project a growth in our export in a scenario like this,” said Magu.

But according to Arvind Kumar, Advisor, Assocham India, the decline of rupee against the dollar has both negatives and positives aspects attached to it.

 “The profitability of the export business goes up and the imports become expensive. The net impact comes down to the improvement in the trade balance,” informed Kumar.

Talking about the other side of the story, Kumar highlighted the companies having huge exposure to foreign exchange market. “These organisations will now have to send out more rupees to send a dollar that will ultimately affect their balance-sheets,” added Kumar. 

Summing up the situation from a global perspective, Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations (FIEO) feels that the scenario will not benefit India in comparison to countries which have seen sharp decline in their currencies. “We also have to consider a 5.6% loss for Malaysia's ringgit, a 3.2% drop in Indonesia's rupiah followed by Chinese yuan which has also hit an 8-1/2 year low,” informed Sahai.