Rupee fall impact: Nowadays, the rate at which the rupee is falling is going to increase the burden on the common man’s pocket. The impact is going to be direct on those things which you and I use daily, like mobile phones, TV, laptop, AC, fridge, make-up and even vehicles. Recently, the government had reduced GST, which gave some relief to the customers, but due to this fall of rupee, that too seems to be reducing.
The weakness of the rupee is causing maximum problems to those companies which import parts or complete products of their products from abroad. The cost of raw materials was increasing for the last few months, yet companies were reluctant to increase prices because the government’s stance was strict after the GST reduction. But now that the dollar has become strong and the rupee has become weak, companies are not able to bear these losses any more.
According to a report by Economics Times, companies manufacturing mobiles, laptops, TVs and large home appliances have made it clear that they will increase prices by 3 to 7 percent between December and January. The reason for this is said to be the huge increase in the prices of memory chips, copper and other important parts. 30 to 70 percent of the cost of many things is dependent on foreign countries, so the weakness of the rupee directly increases the cost.
Rupee ate the benefit of GST
Avneet Singh Marwah, Chief Executive Officer, Super Plastronics, said, “The entire benefit of GST cut will be wiped out due to the weak rupee and rising component prices.”
He also told that the prices of memory chips have increased six times in four months. According to him, “We fear that the demand which had increased due to the GST cut, may weaken again.”
Earlier the companies were making their planning considering the rupee between Rs 85-86 per dollar, but the situation has worsened after it crossed the level of Rs 90. Havells has indicated an increase of around 3 per cent on LED TVs, Super Plastronics at 7-10 per cent, and Godrej Appliances at 5-7 per cent on ACs and fridges. The companies have also privately told the government that it is no longer possible for them to bear the ever-increasing costs on their own.
Beauty products also affected
According to the report, after electronics, the field of beauty products will also be affected. Products from foreign brands like Shiseido, MAC, Bobbi Brown, Clinique and The Body Shop were already expensive, and now the rupee weakness will make them more expensive. Biju Kasim, Chief Officer, Shoppers Stop Beauty, said that the weak rupee increases the cost of the beauty products we import from abroad. Therefore, it ultimately becomes necessary to increase the prices of some expensive imported products.
The automobile sector is also not untouched by this. Recently, GST on two-wheelers and small cars was reduced, due to which sales jumped by 17 percent in October and 19 percent in November. But the fall of rupee may stop this momentum again.
Santosh Iyer, head of Mercedes-Benz India, said, “The prices of luxury vehicles will go up… We are considering a change in prices from January 26.” Balbir Singh Dhillon, head of Audi India, says that the rupee’s fall has a direct and full impact on the cost… although the company has not yet decided the level of increase.
