After Donald Trump's victory in the US presidential election, the continuous fall of rupee against the dollar has raised the apprehension of increase in manufacturing cost in sectors like electronics, electrical and non-electrical machinery, pharma, chemicals. On Tuesday also, the fall in the value of rupee against the dollar continued and the value of one dollar became Rs 84.40.
Most of the raw materials related to manufacturing in these sectors have to be imported. Due to the weakening of the rupee, now more price will have to be paid for imports than before. On the other hand, the financial pressure on the government will also increase due to the increase in the import bill of petroleum and fertilizers.
The government imports fertilizers and gives them to the farmers at a very low price. Similarly, the government also gives subsidy on many other sources of energy from gas cylinders and due to the increase in the import bill, the burden on the government will increase. To deal with this, the government can cut down on expenditure on other items.
According to experts, both electronics production and export are increasing continuously, but still the import of electronics items is more than our export. We are dependent on imports for the raw materials of all other electronics items including mobile phones.
In April-September of the current financial year 2024-25, India's electronics exports stood at $15.6 billion and electronics imports at $48 billion. Similarly, electrical and non-electrical machinery worth $26 billion was imported during this period. Raw materials related to pharma and chemicals are imported in large quantities.
Due to increase in the price of raw material, the total cost of the manufactured goods will increase and that item may become expensive in the domestic market because the manufacturer can bear the increase in cost only till a certain time. Due to increase in manufacturing cost, the competitiveness of these goods will also decrease in the foreign market and export will be affected.
Exporters benefit from the fall in rupee against dollar because they get payment in dollar. But at present the export performance of the country is not good. Therefore, exporters are also not going to get much benefit from the fall in rupee. In the first half of the current financial year (April-September), there was a mere one percent increase in exports. During this period, there was an increase of more than six percent in imports.
Due to the fall in rupee, the financial burden on parents of children studying abroad will increase. They mainly send money to their children in dollar and due to the strength of dollar, they will have to pay more than before. However, those families will benefit from the weakness in rupee to whom their relatives send money from abroad.
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