SME Times News Bureau | 17 Oct, 2018
The
downhill slide of the Indian Rupee has hardly proved beneficial for the Indian
export sector, said Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital.
"Common
perception is that devaluation in currency means good times for exporters,
because they end up selling more as their goods/services become cheaper in the
international market. However, there are several factors at play that mean that
exporters see the negligible positive impact of a falling Rupee," said Mukewar.
The
factors include, he added, import
dependencies, damping because of global supply chains, increased profit
hedging, etc.
For
example, there are trends that show that trade impacts the value of a currency,
rather than the other way around. The Rupee depreciation rate in June this year
was 5.19% while the export growth was 14.17%. However, when the Rupee further
fell sharply to 6.56% the next month, the export growth in fact reduced to
9.37%, he elaborated.
"This
is because we import materials like crude, rough diamonds, gold, and precious
metals to manufacture our major export commodities. Factors such as this mean
that Indian exporters might actually see only minimal impact of the Rupee's
continued devaluation," said Mukewar.