The Indian rupee has reached an unprecedented low against both the UAE dirham and the US dollar, causing varied economic effects. While some goods have become cheaper, increased production and transportation costs in India often surpass these currency benefits.
The rupee’s value has dropped to 24.6 against the dirham and 90.4 against the US dollar.
Shuaib Alhammadi, director of community relations at Union Coop, views this as a golden opportunity to boost imports from India, enhancing competitiveness.
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“We’ve observed a price drop in certain items over the past few months compared to last year, such as a 10% decrease in red onion prices. This trend started with fresh produce and is expected to continue with consumer goods,” Alhammadi explained.
India remains a major trading partner for the UAE, with non-oil bilateral trade hitting $38 billion (Dh139.46 billion) in the first half of 2025. This growth has been fueled by the Comprehensive Economic Partnership Agreement (CEPA) signed in May 2022.
The UAE imports a wide range of consumer goods from India, including rice, fruits, vegetables, textiles, and jewelry.
India serves as a key source market for large UAE retailers like Union Coop, Al Adil Trading, and Al Maya Group.
‘Currency Advantage Not Enough’
Dr. Dhananjay Datar, chairman and managing director of Al Adil Trading, notes the rupee’s decline poses challenges for importers.
“While a weaker rupee might indicate cheaper imports for the UAE, rising costs in India—covering raw materials, labor, fuel, packaging, and transport—complicate the situation. These costs often overshadow currency benefits, leading to higher overall prices. Essential foods, vital to daily needs, are notably impacted. Our focus remains on consistent supply and price stability,” he said.
India’s Purchasing Manufacturing Index (PMI) hit a nine-month low in November amid weaker factory outputs.
Kamal Vachani, group director and partner at Al Maya Group, described the rupee’s decline as having mixed effects. “It can reduce costs for UAE importers, making some Indian products more competitive. However, the impact also hinges on supplier pricing, raw material costs in India, and global demand. Thus, the effects are balanced, neither wholly positive nor negative,” he stated.
Vachani added that the rupee’s decline has not solely driven major price increases. “While some product categories remain stable, a few items influenced by global commodity prices and logistics have seen slight price adjustments of three to seven percent. Generally, production costs drive price changes more than currency shifts,” he said.
Affected Products
Vachani highlighted that products like rice, spices, pulses, and FMCG goods might see slight price changes if supplier costs rise. “Overall, the rupee’s weakness doesn’t directly inflate prices; other market dynamics have a greater impact on final export prices.”
Dr. Dhananjay Datar noted that staples such as lentils, flour, spices, and everyday FMCG items have faced consistent inflation due to rising input costs in India.
“Despite some relief from exchange rates, increased manufacturing, logistics, and compliance costs result in higher shelf prices. We strive to absorb these costs to shield customers, but some price adjustments are unavoidable,” stated Dr. Datar, also known as ‘Masala King’ for his strong presence in the spice industry.
Dr. Datar foresees price hikes for premium spices, edible oils, branded packaged foods, ready-to-eat items, ghee, and certain FMCG products.
