The World MSME Forum has raised serious concerns over the ongoing depreciation of the Indian rupee, warning that the currency's decline is placing unsustainable pressure on the nation's industrial sector. Over the past year, the rupee has weakened by approximately 13% against the US dollar, a trend that is particularly damaging to micro, small, and medium enterprises (MSMEs) already struggling with narrow profit margins.
Impact on MSMEs
India remains heavily reliant on imports for essential resources such as crude oil, machinery, electronics, and chemicals. The falling currency has directly inflated the cost of raw materials, making it difficult for MSMEs to maintain profitability. Badish Jindal, president of the forum based in Ludhiana, stated that the weakening rupee is creating a ripple effect across the industrial ecosystem. Higher production costs inevitably lead to higher prices, reduced demand, and a loss of global competitiveness.
Inflationary Risks
The forum also warned of significant inflationary risks. As a weaker rupee drives up the price of fuel and transportation, the cost of essential commodities rises, eroding the purchasing power of consumers and further dampening domestic demand. The depreciation has also increased the financial burden on companies and the government to service foreign loans, as repayments have become more expensive in rupee terms.
Export Sector Under Stress
Even the export sector, which typically benefits from a weaker currency, is seeing those advantages offset by the rising costs of imported components and intense international competition. The forum argued that the current economic climate is neutralising any potential gains for exporters, leaving the broader manufacturing base in a state of high stress.
Call for Policy Overhaul
In response to the crisis, the forum has called for a comprehensive policy overhaul. It urged the government to focus on strengthening domestic manufacturing and reducing import dependence by promoting renewable energy and value-added exports. The forum also recommended targeted support for MSMEs, including incentives for technology upgrades to improve productivity and help small businesses withstand global economic shocks.
The forum's warning comes at a critical time as the Indian economy faces multiple headwinds. Without decisive action, the continued depreciation of the rupee could further destabilise the industrial sector, affecting employment and economic growth.
