Impact on Sectors:
Oil & Gas:
India imports more than 85% of its oil & around 50% of the gas from other countries. As the dollar holds strong against Indian Rupee, this sector is negatively impacted. Crude importers such as Indian Oil, BPCL, HPCL and gas importers such as GAIL, & GSPC is facing a rise in purchasing cost.
The majority of raw materials such as crude & palm oil derivatives are imported which accounts for 50% of the input cost. But due to the falling value of the rupee companies are increasing the prices to compensate for the increase in the input cost.
When it comes to electronics, about 40 to 60% of the total input cost comes from imported components and machines. India imported closer to $56.73Bn in electrical, & electronic equipment in 2021. Especially in the smartphone sector, around 70 to 80% of the input cost is imported. Now due to the increase in value of the dollar, their cost of making is also increased.
There is a positive impact of the falling rupee on the Indian economy.
When the rupee falls, Indian exports become cheaper for foreign buyers. This then leads to an increase in demand for Indian goods in foreign markets. Due to this a fall in the value of the Indian rupee can help boost exports.