New Delhi: Indian exporters are finding little relief from the rupee's recent slide to a record low of 93.2 against the US dollar. While a weaker currency typically boosts competitiveness, surging input costs for raw materials, energy, and freight are largely canceling out these gains. Key sectors like textiles, leather, agro products, and carpets face unique challenges in navigating this complex trade environment.[cfo+2]
Rupee's Limited Boost
The Indian rupee recently touched an unprecedented low against the US dollar, trading at 93.2 rupees for one dollar.In theory, this depreciation should make Indian goods cheaper for international buyers, giving exporters a competitive edge and improving their profit margins.Ajay Sahai, Director General of the Federation of Indian Export Organisations, noted that a rupee level of ₹93.86 provides a "modest competitive edge" for Indian exports, especially in sectors like textiles, leather, agro products, and carpets. He added that it could "support margins or market share in price-sensitive markets." However, industry executives and economists largely agree that any benefit is "small" and "short-term," with some even dismissing "undue hype" around the rupee's fall as a major advantage.[alanchand+7]
Rising Costs Squeeze Key Sectors[cfo+4]
The primary reason for the diluted benefit is the relentless increase in input costs. Higher crude oil prices, escalating freight charges, and rising raw material expenses are significantly eroding exporters' gains. Geopolitical tensions and disruptions in global shipping routes are driving up energy costs and affecting supply chains. This leads to broader inflationary pressures within the Indian economy, further complicating the situation for businesses. Manoranjan Sharma, chief economist at Infomerics Ratings, warned that "energy-intensive industries, including aviation, logistics, paints and chemicals, are likely to experience margin compression due to rising input costs."[cfo+10]
Textile and Leather Industries Face Headwinds[indianexpress]
India's textile industry is grappling with a significant rise in production costs. Raw material expenses, including synthetic fibers like polyester and nylon, as well as dyes and chemicals, have climbed by 20-25% in recent weeks. This is largely due to crude oil prices moving past $100 per barrel. Shipping rates have also seen a dramatic increase, jumping by as much as 80-90%, making it more expensive to send goods overseas. Kailash Lalpuria, executive director and chief executive officer of Indo Count Industries Ltd., attributed rising prices to "labour migration, logistical expenses, container constraints, and rising freight costs." The sector also faces a major hurdle from US tariffs, which have been as high as 50% on Indian textile products, eroding any currency-linked advantages. India's textile and apparel exports fell 13% year-on-year to $2.67 billion in October 2025.[kotakneo+8]
The leather industry is also under immense pressure. Exporters report a slowdown in new orders from key markets in Europe and West Asia, with existing orders often renegotiated or delayed. Raw material prices for leather have seen sharp increases, with some units reporting a 70% jump in just one month. Freight costs have surged to between $1,500 and $2,000 per container, making many shipments unprofitable. SM Fayaz Ahmad, honorary general secretary of the Ambur Tannery Association, stated that these increased freight costs are "making shipments unviable." Vikas Mahtani, regional chairman at the Council for Leather Exports, described the situation as a "triple whammy" of rising petroleum-based raw material costs, supply disruptions, and the rupee's depreciation making imported inputs more expensive. Some reports even suggest that rupee depreciation has a negative impact on both the textile and leather sectors due to their reliance on imported intermediates and weak global demand.[youtube+5]
Mixed Outlook for Agro Products and Carpets[bfsi+1]
The agricultural products sector stands out as one of the few that consistently benefits from a weaker rupee due to its low dependence on imports. India's agricultural exports showed resilience, reaching $36.26 billion between April and December 2024. However, this sector faces its own set of challenges, including issues with perishability, inconsistent quality, strict regulatory compliance in foreign markets, and inadequate cold chain infrastructure. Geopolitical conflicts, particularly in West Asia, have also impacted agricultural exports, with an estimated $11.8 billion worth of products to the region being vulnerable. Around 400,000 metric tonnes of various agro products, including basmati rice, fruits, vegetables, and meat, are currently stuck in transit or at ports due to these disruptions.[cfo+6]
Meanwhile, the Indian carpet industry is facing severe difficulties. The United States market, which accounts for 60-70% of India's carpet exports, imposed tariffs as high as 50%. This has led to a significant drop in orders from American buyers, resulting in widespread layoffs and production halts in major carpet manufacturing hubs. High freight costs, particularly for bulky and heavy items like carpets, further compound the financial burden on exporters. An industry representative from Bikaner noted that "With shipments stalled, production has nearly ceased, and many workers are returning home."[growinagri+7]
Government Support and Future Outlook[globaltextiletimes]
In response to some of these challenges, the Indian government has taken steps like restoring benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, excluding agricultural and processed food products. It also provided relief by exempting customs duty on raw cotton for a period in 2025. Despite these measures, the overall sentiment among exporters remains cautious. Sanjay Jain, Managing Director of TT Limited, stated, "It is logically positive but practically every input is up by 10-50% so overall things are still bad. These 1-2% will just reduce the pain." Pankaj Chadha, chairman of EEPC India, anticipated a 20% year-on-year decline in goods in March, citing the impact on exports to the Middle East. The interplay of a depreciating rupee and escalating input costs means that Indian exporters must navigate a challenging global trade landscape with limited competitive advantages.[cfo+6]
