Weaker rupee to push India’s import bill, says Global Trade Research Initiative

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The weaker rupee will push the country’s import bill due to higher payments for crude oil, coal, vegetable oil, gold, diamonds, electronics, machinery, plastics, and chemicals, economic think tank Global Trade Research Initiative (GTRI) said on Friday (January 17, 2025).

Citing an example, it said the depreciating domestic currency will increase India’s gold import bill, especially as global gold prices have jumped 31.25%,, rising from $65,877 per kg in January 2024 to $86,464 per kg in January 2025.

Since January 16, last year, the Indian Rupee (INR) has weakened by 4.71% against the U.S. dollar, falling from ₹82.8 to ₹86.7.

In the last ten years, between January 2015 and 2025, the INR has weakened by 41.3% against the U.S. dollar, falling from ₹41.2 to ₹86.7, the GTRI said in its report.

In comparison, the Chinese Yuan depreciated by 3.24%, from Yuan 7.10 to Yuan 7.33.

“Overall, weaker INR will inflate import bills, raise energy and input prices, leading to an overheated economy. Past ten-year export data says that weak INR does not help exports contrary to what economists say,” GTRI Founder Ajay Srivastava said.

He added that while conventional wisdom suggests that a weaker currency should boost exports, India’s decade-long data tells a different story: high-import sectors are thriving, while labour-intensive, low-import industries like textiles are floundering.

The think tank also said that for sectors relying heavily on imports, a depreciating rupee against the U.S. dollar increases input costs, reducing competitiveness.

In theory, sectors with low import dependence, like textiles, should gain the most from a weaker rupee, while high-import sectors like electronics should benefit the least.

“However, trade data from 2014 to 2024 tells a different story. During the 2014 to 2024 period, overall merchandise exports grew by 39%, but high-import sectors like electronics, machinery, and computers saw much higher growth,” he said adding electronics exports surged by 232.8%, and machinery and computer exports grew by 152.4%.

Meanwhile, low-import sectors like textiles and clothing experienced negative growth, even though the weaker rupee should have made their goods more competitive globally, he added.

“These trends suggest that a weaker rupee doesn’t always boost exports. It hurts the labour-intensive exports most and helps import-driven exports with low-value add,” Srivastava said.

The GTRI suggested that for India to achieve long-term economic stability, it must strike a careful balance between growth and inflation control while rethinking its rupee management and trade strategies.

“However, the reality is sobering. Much of India’s $600 billion foreign reserves are loans/investments due for repayment with interest, limiting their role in stabilising the rupee,” he said.