Rupee’s Plunge Threatens Indian Wind Industry
Bloomberg is reporting that the “rupee’s biggest plunge in 20 years” could have serious billion-dollar repercussions for the country’s burgeoning wind industry, with higher finance and import costs negating benefits from the government subsidy which was reimplemented last month.
An advisor for the Reserve Bank of India noted that the rupee could sink past 70 per dollar despite the Bank’s attempts to step the plunge. “There’s a high probability” of the rupee ending 2013 at 65 to 70 and an “external shock could push it above 70,” Arvind Virmani, a member of the Reserve Bank’s advisory panel on monetary policy, said in e-mailed responses to questions posed by Bloomberg.
The rupee has been in decline against the US dollar ever since May of this year, with reports varying from 17% to 19% drops against the year’s opening.
Subsequently, according to Mahesh Makhija, director of renewables at the Indian unit of CLP Holdings, the slide has stalled new investment plans, while turbine makers Suzlon Energy and Gamesa — who consider India one of their top three markets — may raise prices.
“A rapidly falling rupee affects investor confidence in the Indian economy and is likely to impact our expansion plans,” Makhija said. “Manufacturers who aren’t hedged in the short-term could take the increased costs to customers over the next three to six months. Developers are also likely to be affected by growing inflation.”
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This comes in the wake of positive Indian wind industry steps, taken by the Indian Ministry of New & Renewable Energy, which intends to launch the National Offshore Wind Energy Authority (NOWA).
NOWA’s aim will be to “proliferate deployment of offshore wind energy projects in” India, as well as maintaining responsibility for “carrying out resource assessment along the country’s coastline and survey potential project sites”.
Owing to my lack of financial expertise, the lion’s share of this article is based on work done by Bloomberg, with a healthy dose of corresponding information gathered from around reputable news sources.
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