Advanced International Journal for Research

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Exchange Rate Volatility and India’s Export Competitiveness: Sectoral Evidence from 2005–2024

Author(s) Miss. Rachana Dattatray Kolape
Country India
Abstract The period from 2005 to 2024 witnessed significant fluctuations in the Indian rupee's exchange rate against the US dollar and other major currencies, influenced by global financial crises, commodity price swings, and domestic policy shifts. This paper empirically investigates the impact of exchange rate volatility on India's export competitiveness across key sectors including manufacturing (with focus on engineering goods and textiles), information technology services, and pharmaceuticals. Drawing on data from the Reserve Bank of India (RBI) exchange rate archives, Directorate General of Foreign Trade (DGFT) export statistics, Centre for Monitoring Indian Economy (CMIE) trade analytics, and World Bank World Integrated Trade Solution (WITS), the analysis employs Generalized Autoregressive Conditional Heteroskedasticity (GARCH) and Exponential GARCH (EGARCH) models to measure volatility, alongside sectoral elasticity estimations to assess responsiveness of exports to volatility. Findings indicate that higher exchange rate volatility generally dampens export growth in manufacturing sectors due to risk aversion among exporters, while pharmaceuticals show resilience owing to inelastic demand and IT services exhibit mixed effects tied to long-term contracts. The study highlights the need for hedging mechanisms and policy interventions to enhance competitiveness. Keywords: exchange rate volatility, export competitiveness, GARCH modeling, sectoral analysis, India.
Keywords exchange rate volatility, export competitiveness, GARCH modeling, sectoral analysis, India.
Published In Volume 6, Issue 6, November-December 2025
Published On 2025-11-15
DOI https://doi.org/10.63363/aijfr.2025.v06i06.2065
Short DOI https://doi.org/hbbz7z
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