The Indian rupee has gone down by approximately 30% against the U.S. dollar over the past ten years in value. In the year 2013, the exchange rate was around ₹60 for one dollar but by 2023-2024, it had decreased to a range of ₹82 to ₹84. This decline in value impacts imports, exports, investments, and the startup ecosystem. What does this change mean for both new and existing startups in India’s technology and innovation sector?
The Drivers of Depreciation
Several macroeconomic factors drive the rupee’s fall:
- Rising oil imports and widening trade deficit.
- U.S. Federal Reserve rate hikes; making the dollar stronger.
- Global inflationary pressures and capital outflows from emerging markets.
- India’s reliance on imported technology and energy.
This depreciation affects not only individuals and corporations, but also the DNA of companies looking to expand.
Impact on Early-Stage Startups
For new startups building themselves in India, a weak rupee creates unique challenges:
- Higher tech costs: The cost of software subscriptions, cloud services, and AI tools in USD is increasing.
- Fundraising hurdles: Global investors may want better prices because their dollar returns decrease when converted from INR.
- Talent retention issues: Many skilled developers prefer freelancing for global companies that pay in US dollars.
However, it also opens opportunities:
- Global outsourcing advantage: A weaker rupee makes Indian services cheaper for international clients.
- Export-oriented startups in SaaS, IT, and digital services can attract more global customers.
Impact on Mature Startups and Unicorns
For older startups and unicorns, the rupee’s decline has a different impact:
- Capital burn rises for firms dependent on imported hardware, logistics tech, or advertising spends on global platforms.
- Debt servicing gets costlier if loans are dollar-denominated.
- Export-driven businesses (like SaaS, gaming, and cross-border e-commerce) gain higher revenues when earnings are converted from USD to INR.
- IPO valuations abroad may be pressured if returns in dollar terms don’t look attractive.
Shaping a Resilient Startup Ecosystem
The rupee’s decline is a double-edged sword:
- For domestic, consumption-driven startups, it increases costs and investor scrutiny.
- For global-facing SaaS and service startups, it creates a competitive pricing edge.
In the long run, startups that hedge currency risks, diversify revenue streams, and build globally scalable models will thrive despite currency volatility.
Also Read: Flipkart, Zepto, Blinkit: Why Hyperdelivery Isn’t India’s Growth Story
