Contrary to apprehensions that Indian exports would decline due to rising rupee, stronger rupee will bring in rich dividends for India Inc and increase its profit margins between 12-15 per cent in long run, reveals a study released by Assocham on Monday.

Stronger rupee will encourage exporters to bring in new technologies with cheaper imports for expanding their existing capacities, the study shows. The aforesaid findings are incorporated in the Asscoham study on ‘Impact of Rupee Appreciation of India’s Exports Vis-a-vis Economy.’

The sectors that are likely to gain a great deal with the rupee becoming stronger include petro and petro products, engineering goods, gems & jewellery, drugs & pharmaceuticals as these sectors have imported inputs with respective percentage of 77.18, 21.55, 92.44 and 19.41.

The major impact of rupee appreciation so far has been on the agro & food processing, auto & auto components, leather & leather products, cotton, textiles & apparel sector with imported inputs of 11.73, 13.54, 15.66 and 10.11 respectively.

Other sectors on which rupee appreciations so far has moderate impact include drugs & pharmaceuticals with 91.4 per cent imported inputs and engineering goods which has 21.55 per cent imported inputs.

Reduces import cost

The study concludes that a stronger rupee would reduce the cost of imports and would have some positive impact on those exporters who have large import contents.

Against this backdrop, it also suggests that if companies are able to expand their capacities in the rupee appreciating scenario, they would in the long run, definitely be in a win-win situation because demand for Indian products in developed countries is not going to slowdown. 

“Indian Inc would be able to export more at very competitive prices as a result of capacity building through technological advancement and increase its margins by 10-15 per cent,” the Assocham’s study notes.