To what extent does currency depreciation sustain export-sector earnings? Examine the risks of relying on translation gains rather than volume growth.

Crisil Intelligence estimates that India Inc's revenue grew 16–16.5% y-o-y in Q2 FY27. It says export sectors were helped by firmer commodity realisations and favourable currency translation [1]. A weaker rupee does support earnings. The support is partial and short-lived.

How far depreciation sustains earnings

• Translation boost: each dollar earned now converts into more rupees. Exporters whose costs are mainly in rupees gain the most. IT services is the clearest case: IT sales grew 14.8% y-o-y in Q1 FY27 [2].
• Price competitiveness: exporters can cut their dollar prices or protect their margins against foreign rivals.
• Margin cushion: the boost helped keep the aggregate EBITDA margin broadly stable at 18.2–18.6% [1].
• Limits: exporters that rely on imported inputs, such as electronics, gems and petroleum, gain less because those inputs cost more. Manufacturing raw-material costs rose 27.5% while sales rose 21.4% [2]. Hedged contracts delay the gains, and weak global demand blunts them.

Verdict: depreciation sustains earnings to a moderate extent, and mostly in the short run.

Export revenue (₹) = Volume  ×  $ price  ×  ₹/$ rate
                     durable    cyclical    reversible

Only volume growth shows real competitiveness.

Risks of relying on translation gains

• Illusory growth: revenue rises without any gain in market share, so the headline growth figure overstates real demand.
• Reversibility: if the rupee strengthens or the RBI intervenes, the gains disappear and earnings become volatile.
• Imported inflation: crude oil and other inputs cost more. Downstream sectors are already absorbing higher input costs [1], and rising prices limit how far the RBI can cut rates.
• Competitive devaluation: when rival countries' currencies also fall, the advantage cancels out.
• Debt-servicing risk: firms with unhedged foreign-currency loans, such as external commercial borrowings (ECBs), face higher repayments.
• Complacency: easy currency gains weaken the push to invest in productivity, R&D and higher-value products.

Way forward

• Raise volumes through the PLI schemes, cheaper logistics (PM Gati Shakti, National Logistics Policy) and better market access through FTAs.
• Keep the RBI's managed float aimed at stability, not at keeping the rupee cheap.

A weaker rupee is a cushion for export earnings, not an engine. Lasting earnings depend on competitiveness from productivity, quality and access to markets. Growth built on volume, and not on the exchange rate, gives the steady export performance that fits the aims of Viksit Bharat and SDG 8 (decent work and economic growth).