The weaker rupee will increase India’s import bill due to higher payments for crude oil, coal, vegetable oil, gold, diamonds, electronics, machinery, plastics, and chemicals, the economic think tank GTRI reported on Friday.
Citing an example, the report noted that the depreciating domestic currency will inflate India’s gold import bill, particularly as global gold prices have risen by 31.25%, from USD 65,877 per kg in January 2024 to USD 86,464 per kg in January 2025.
Since 16 January last year, the Indian Rupee (INR) has weakened by 4.71% against the US dollar, declining from Rs 82.8 to Rs 86.7. Over the past decade, between January 2015 and 2025, the INR has depreciated by 41.3%, falling from Rs 61.2 to Rs 86.7, the Global Trade Research Initiative (GTRI) stated in its report.
In comparison, the Chinese Yuan depreciated by only 3.24% over the same period, from Yuan 7.10 to Yuan 7.33.
“A weaker INR will inflate import bills, raise energy and input costs, and overheat the economy. Ten years of export data indicate that a weak INR does not boost exports as traditionally suggested,” GTRI Founder Ajay Srivastava said.
While conventional economic wisdom suggests that a weaker currency should enhance exports, India’s decade-long data tells a different story. High-import sectors are thriving, while labour-intensive, low-import industries like textiles are struggling, Srivastava explained.
The think tank observed that for industries heavily reliant on imports, a depreciating rupee against the US dollar raises input costs and reduces competitiveness.
In theory, sectors with low import dependence, such as textiles, should benefit the most from a weaker rupee, while high-import sectors like electronics should benefit the least. However, trade data from 2014 to 2024 reveals a contrasting trend.
During this period, overall merchandise exports grew by 39%, but high-import sectors like electronics, machinery, and computers recorded much higher growth. Electronics exports surged by 232.8%, and machinery and computer exports increased by 152.4%.
Meanwhile, low-import sectors such as textiles and clothing experienced negative growth, despite the weaker rupee ostensibly making their goods more competitive globally.
These trends suggest that a weaker rupee doesn’t always boost exports. It disproportionately harms labour-intensive exports and favours import-driven exports with low value addition,” Srivastava added.
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