As the Indian rupee plunges against the dollar, electronics and EV sectors raise prices to offset import costs, highlighting the urgent need for greater localisation amid currency volatility.
On Monday, the Indian rupee neared the 88-mark against the US dollar, intensifying concerns for businesses in sectors sensitive to imports. With the rupee’s decline, many in the electronics industry are raising prices to protect their margins, as the weakening currency is expected to drive up imported costs.
According to a Financial Express report, numerous industry players are opting for price hikes to counteract the mounting pressure of import costs. For instance, Haier Appliances raised prices of air conditioners by 5 per cent in February and is considering a further 4-5 per cent increase in March for commercial freezers and LED TVs.
On the other hand, JVC TV India is also planning a 5 per cent price hike for smart TVs by next month, citing the unexpected decline of the rupee as the primary reason for the increase.
Although localisation efforts have reduced the import dependence in electronics—cutting the percentage of imported components from 60-70 per cent to 30-40 per cent in recent years—essential parts such as compressors for air conditioners, panels for TVs, and motors for washing machines are still imported.
This ongoing reliance on foreign components exposes companies to the impact of currency fluctuations, particularly as the rupee continues to depreciate.
In the electric vehicle sector, the rupee’s decline has highlighted the need for greater localisation of components like battery cells and power electronics. Industry experts emphasise that enhancing local production of critical parts is crucial to building a more resilient supply chain and protecting against future currency volatility.
The declining value of the Indian rupee is undeniably impacting the Indian economy, particularly in relation to oil prices and natural resources. While the effects on various industries are mixed, the key question remains: what measures can the Reserve Bank of India implement to prevent further currency depreciation?
