Indian cos take guard against Rupee’s strikes: Fast-track exports, deepen localisation, extend currency hedging timelines

Kolkata: India Inc is accelerating exports, extending currency hedging timelines, and deepening localisation, seeking to shield margins from a sharply weaker rupee that’s starting to erode their financial health.

LG Electronics said it will start exporting products from its recently unveiled mass-market range — largely made exclusively for the Indian market — to nearly two dozen countries. The South Korean electronics maker will also increase localisation by 3-4 percentage points.

Leading retailers such as Lifestyle and Arvind Fashions are advancing inventory purchases to lock-in costs ahead of expected further price increases, even as they enhance domestic sourcing, said company executives.


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Retail chain Shoppers Stop has started hedging its entire FY27 forex exposure for imported beauty products sold through the distribution channel, compared with the earlier practice of 2-3 months. FSN E-Commerce Ventures, which runs Nykaa, told investors that it’s hedging forex exposure for a longer period of 2-3 months to guard against near-term currency volatility.

The rupee lost 4.5-5% against the dollar since January and is currently at around Rs 95-96. Since last October, the rupee has weakened by 8-9% against the US currency. The Iran war and elevated crude prices have further accelerated the slide.

The push to protect margins is despite companies initiating price hikes over the past 3-5 months.

Navigating Volatility

The aggressive push to protect margins is despite companies initiating price hikes over the past 3-5 months, including two rounds of increases of as much as 12-13% in electronic products.

Most companies said however that they haven’t been able to fully pass on the entire cost burden, with the pressure stemming simultaneously from rupee depreciation and raw material inflation.

“We are using all financial options available from the banks in a bigger way to hedge our forex risks,” said Biju Kasim, chief executive at Global SS Beauty Brands, a wholly owned subsidiary of Shoppers Stop. “With the pressure on rupee depreciation for the last 6-8 months, the hedging is done more prudently and for a longer-term horizon.”

Departmental store chain Lifestyle shifted its entire footwear sourcing locally, while cutting apparel imports to 5% from about 15% over the past 5-6 months.

Arvind Fashions is advancing inventory purchases to lock in costs, apart from actively hedging forex exposure, said Amisha Jain, managing director. She added that the company is also increasing local sourcing.

“Further to navigate the volatility, we plan to remain nimble,” Jain told analysts recently. “We intend to double down on our cost control measures, and we will selectively implement price increases while safeguarding growth.”

Arvind Fashions sells Calvin Klein and Tommy Hilfiger brands in India.

Companies have moved into war-footing mode to manage the forex volatility, especially after several import-dependent companies reported margin impact in the March quarter. Some such as LG, Voltas, and Blue Star flagged challenges in protecting margins amid volatile exchange rates, in recent investor calls.