The recent depreciation of the Indian rupee is seen as a potential boon for the country's labor-intensive export sectors, say experts. They believe the devaluation could lead to a 2-19 per cent increase in outward shipments of products such as readymade garments, carpets, and handicrafts. Handicraft exporters, in particular, stand to benefit significantly with a potential 100 per cent gain.
Exporters could see a eight per cent gain if the rupee depreciates approximately 10 per cent, coupled with a reduction in the import content of their goods to 20 per cent. Moreover, the depreciation may be advantages in contract negotiations, as highlighted by Ajay Sahai, Director General of the Federation of Indian Export Organisations.
The global economic slowdown has taken a toll on labor-intensive sectors, with a 21.9 per cent decline in apparel production during the first half of 2023-24. The leather industry also faced growth stagnation and apparel production remained 34 per cent lower than the corresponding period in pre-COVID-19 year of 2019-20. Leather exports declined 22 per cent from their pre-pandemic levels.
Specifically, ready-made garment exports saw a 14.58 per cent year-on-year decline to $7.82 billion during the April-October period. Handicrafts and leather product exports also recorded declines of 11.37 and 11.74 per cent, respectively.
In the April-October period, India's overall merchandise exports decreased 7 per cent to $244.89 billion, while imports fell 8.95 per cent to $391.96 billion.