By PTI

NEW DELHI: The fall in the value of the rupee against the US dollar is proving to be a mixed bag for the industry, with some sectors bearing the brunt of it while others, especially software exporters, hope for gains continuous.

The rupiah, which has depreciated against the greenback, is near the psychological barrier of 80 to the dollar and is expected to remain subdued as the Federal Reserve works overtime to contain inflation, which is at an all-time high, in the USA.

The biggest impact of rupee depreciation will be on imported goods or goods using imported components, and the most sought-after item in this category is a mobile phone.

“Each percentage drop in the value of the rupee has an impact of 0.6% on the mobile phone supply chain due to imports of components. The 5% drop (in the value of the rupee) has a 3% impact on overall profitability, therefore prices need to come down,” said ICEA President Pankaj Mohindroo.

On the other hand, he added, “India’s export ecosystem is benefiting. Imports would have become expensive to that extent, but luckily commodity prices have started to decline.”

Regarding the impact of Rupee depreciation on the software sector, Deepak Jotwani, Assistant Vice President and Head of Sector – Corporate Valuations, ICRA said, “As a significant portion of revenue If the recent weakness seen in INR continues over the coming quarters, he said, “the depreciation of INR is expected to increase industry profits in fiscal year 2023.”

READ ALSO | Rupee on the edge of 80 against the US dollar; here is what caused it

Sumit Pokharna, VP – Fundamental Research, Kotak Securities, said Indian IT companies face cross-currency headwinds emanating from 5%, 6.6% and 1.7% appreciation in the USD against the EUR, GBP and AUD, respectively, in Q1FY23. Optically, the depreciation of the rupiah may appear as a headwind, however, cross-currency headwinds ensured only a marginal tailwind for the quarter,” Pokharna added.

Regarding the impact on the steel sector, Alok Sahay, Secretary General of the Indian Steel Association (ISA), said that although the depreciation of the rupee against the US dollar would have an impact on the domestic steel industry input costs, “there may not be an immediate reduction impact on the cost of domestic steel production as the impact occurs with a lag of two months or more depending on the inventory cycle maintained by steel producers”.

He further stated that coking coal is one of the major inputs for steel production apart from iron ore (available domestically) and any decline in the rupee would lead to an increase in the price of coal imported.

Experts in the energy sector are of the opinion that the depreciation of the rupee will drive up the costs of imported components. This will increase our import bill in terms of INR and further amplify the need to increase the share of renewables in our energy mix. Securing the supply chains of the minerals needed to generate renewable electricity will help us avoid going from a reliance on Big Oil today to a reliance on Big Shovel tomorrow. Such proactive and comprehensive sourcing and processing will help us to profitably manufacture our energy in India and move towards the energy security we so desperately need,” said Pavan Choudary, Business Intellectual and Chairman of Blue Circle.

Director of the Medical Technology Association of India (MTaI), Sanjay Bhutani, said that the medical device industry is already facing the brunt of several inflationary challenges owing to the steep rise in the cost of transportation charges as well as a limited supply of raw materials.

“The devaluation of the rupiah has worsened the already difficult terrain for the industry and increased the cost of imports of essential medical devices. While we appreciate the government’s commitment to improving the ease of doing business, we hope that some leeway will be given to the industry to absorb these successes,” Bhutani said.

According to the latest data, the country’s imports rose 57.55 percent to $66.31 billion in June from the month a year earlier. The merchandise trade deficit in June 2022 was estimated at USD 26.18 billion compared to USD 9.60 billion in June 2021, an increase of 172.72%.

NEW DELHI: The fall in the value of the rupee against the US dollar is proving to be a mixed bag for the industry, with some sectors bearing the brunt of it while others, especially software exporters, hope for gains continuous. The rupiah, which has depreciated against the greenback, is near the psychological barrier of 80 to the dollar and is expected to remain subdued as the Federal Reserve works overtime to contain inflation, which is at an all-time high, in the USA. The biggest impact of rupee depreciation will be on imported goods or goods using imported components, and the most sought-after item in this category is a mobile phone. “Each percentage drop in the value of the rupee has an impact of 0.6% on the mobile phone supply chain due to imports of components. The 5% drop (in the value of the rupee) has a 3% impact on overall profitability. Therefore, prices need to come down,” said ICEA President Pankaj Mohindroo. On the other hand, he added, “the export ecosystem of India takes advantage of it. Imports would have become expensive to that extent, but fortunately commodity prices have started to decline.” Regarding the impact of the Rupee depreciation on the software sector, Deepak Jotwani, Assistant Vice President and Sector Head – Business Valuations, ICRA said: “Given that a significant portion of the industry’s revenue is denominated in US dollars, the depreciation of the INR against If the recent weakness seen for the INR holds steady over the next few quarters, he said, “INR depreciation is expected to boost industry profits in fiscal year 2023.” READ ALSO | Rupee on edge of 80 against the US dollar; here’s what caused it Sumit Pokharna, VP – Fundamental Research, Kotak Securities, estimated that Indian IT companies are facing cross-currency headwinds emanating from 5%, 6.6% and 1.7% cent of the USD against the EUR, GBP and AUD, respectively, in the first quarter of FY23. Optically, the depreciation of the rupee may appear as a headwind, however, the provided only a marginal tailwind for the quarter,” Pokharna added. Regarding the impact on the steel sector, Alok Sahay, Secretary General of the Indian Steel Association (ISA), said that although the depreciation of the rupee against the US dollar would have an impact on the domestic steel industry input costs, “there may not be an immediate reduction impact on the cost of domestic steel production as the impact occurs with a lag of two months or more depending on the inventory cycle maintained by steel producers”. He further stated that coking coal is one of the major inputs for steel production apart from iron ore (available domestically) and any decline in the rupee would lead to an increase in the price of coal imported. Experts in the energy sector are of the opinion that the depreciation of the rupee will drive up the costs of imported components. This will increase our import bill in terms of INR and further amplify the need to increase the share of renewables in our energy mix. Securing the supply chains for the minerals needed to generate renewable electricity will help us avoid going from a reliance on Big Oil today to a reliance on Big Shovel tomorrow. Such proactive and comprehensive sourcing and processing will help us manufacture our energy profitably in India and move towards the energy security we so desperately need,” said Pavan Choudary, Business Intellectual and Chairman of Blue Circle. Director of the Medical Technology Association of India (MTaI) Sanjay Bhutani said the medical device industry is already facing the brunt of several inflationary challenges owing to the steep rise in the cost of freight charges as well as limited supply. in raw materials. “The devaluation of the rupiah has worsened the already difficult terrain for the industry and increased the cost of imports of essential medical devices. While we appreciate the government’s commitment to improving the ease of doing business, we hope that some leeway will be given to the industry to absorb these hits,” Bhutani said. According to the latest data, the country’s imports rose 57.55 percent to $66.31 billion in June from the previous month Merchandise trade deficit in June 2022 was estimated at $26.18 billion from $9.60 billion in June 2021, an increase of 172.72%.