Over seven per cent depreciation of the rupee against the dollar in the global market since January has elated local players in sectors like pharmaceuticals, chemicals, dye-stuffs and ceramics, where the export component is higher. However, players with lower exports but reliant on imported raw materials, such as those in the foundry sector, may be net losers. Players say that hedging also minimised net gains and importers of Indian goods try to bargain as a weaker rupee narrows profit margins. The Indian Rupee has depreciated from about 63.50 per dollar in January to 68 per dollar on May 15. Players said that fluctuation in currency is not good for small companies dependent heavily on imported raw materials. These mainly include sectors such as foundry, and those dependent on petroleum-based products, either for processes or for transport. Sectors such as pharmaceuticals, ceramics and agro products import raw materials mainly from China, but also have a high share of exports and hence stand to turn over net gains. The overall impact on the dye-stuffs industry is positive as exports constitute about half of the total domestic turnover in Gujarat, said Bhupendra Patel, president of Gujarat Dye-stuffs Manufacturers Association (GDMA). "While there are significant imports of raw materials from China, the exports are higher and so the net financial impact is positive," said Patel. Dinesh Daga, CMD of Shri Hansraj Alloys, a foundry based out of Dholka, said that 7-8% depreciation of Rupee means 7-8% rise in cost of input raw materials such as scrap, high nickel alloys, as well as non-ferrous metals. Those who hedge against currency fluctuations are immune from losses but smaller players, whose exports are limited, lose out as raw materials become costlier. "While it is perceived that depreciation of Rupee will lead to net gains, reality is that gains are limited as banks force exporters to hedge against risks of currency volatility. So exporters fix their margins. On the other hand, foreign importers tend to bargain on weak Rupee, which eventually minimises gains," said Shailesh Patwari, president of Gujarat Chamber of Commerce and Industry (GCCI). Depreciation of Rupee was long overdue. We were anticipating it. For about two years now it has remained stable at Rs 64 –65 per dollar against an average depreciation of 3-4% annually. India's exports of pharmaceutical products are to the tune of $17 billion. The benefits of depreciation outweigh the rise in cost of imported raw materials.Viranchi Shah, chairman, IDMA – Gujarat For the ceramic sector in Morbi, fuel is an important raw material that has an import component and becomes costlier. It increases the processing and logistics costs. However, ceramic exports at Rs 12,000 crore are 35% of total turnover. So there is a net gain. The gain is almost five times the rise in the import costs. So we benefit from it.

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