The Indian rupee’s drop to a new low against the UAE dirham raises questions about its impact on household expenses, with many wondering whether grocery prices in the UAE could soon decrease.
Indian Rupee Slumps to New Low vs Dirham — What Does It Mean for UAE Grocery Costs?
The Indian rupee has fallen to its lowest level ever against both the UAE dirham and the US dollar, trading at 24.6 per dirham and 90.4 per dollar. While this sharp depreciation makes some imported Indian products cheaper, overall price drops in the UAE remain limited because rising manufacturing and transport expenses in India often offset the currency benefit.
According to Shuaib Alhammadi, director of community relations at Union Coop, the weaker rupee does create an opportunity for UAE retailers to increase imports from India, as goods become more competitively priced. He noted that certain products have already become cheaper compared to last year — especially fresh produce like red onions, which have seen price reductions of around 10 per cent. The initial decline began with perishables and is expected to extend to more packaged consumer items.
India continues to be one of the UAE’s biggest trading partners. In the first half of 2025, non-oil trade between the two countries reached $38 billion (Dh139.46 billion), boosted significantly by the Comprehensive Economic Partnership Agreement (CEPA) signed in 2022.
A wide range of Indian goods flows into the UAE, including rice, fresh fruits and vegetables, clothing, gemstones and jewellery. Major UAE retail chains such as Union Coop, Al Adil Trading and Al Maya Group rely heavily on India as a key sourcing market, given their substantial footprint across the Emirates.
Outweigh currency advantage
Dr. Dhananjay Datar, chairman and managing director of Al Adil Trading, said the rupee’s record low has created a challenging environment for importers.
“While a weaker rupee might seem like it would reduce import costs for markets such as the UAE, the situation is more complicated. In India, production expenses — including raw materials, labour, fuel, packaging, and transportation — have surged in recent months. These rising internal costs often outweigh any currency advantage, keeping the final import prices high. This effect is particularly noticeable for essential food items that households rely on daily. Our focus remains on maintaining steady supply and price stability for the community,” he explained.
Meanwhile, India’s Purchasing Managers’ Index (PMI) dropped to a nine-month low in November, reflecting slower factory output and reduced manufacturing activity.
Products Impacted
Dr. Dhananjay Datar, chairman and managing director of Al Adil Trading, said the rupee’s record low has created a challenging environment for importers.
“While a weaker rupee might seem like it would reduce import costs for markets such as the UAE, the situation is more complicated. In India, production expenses — including raw materials, labour, fuel, packaging, and transportation — have surged in recent months. These rising internal costs often outweigh any currency advantage, keeping the final import prices high. This effect is particularly noticeable for essential food items that households rely on daily. Our focus remains on maintaining steady supply and price stability for the community,” he explained.
Meanwhile, India’s Purchasing Managers’ Index (PMI) dropped to a nine-month low in November, reflecting slower factory output and reduced manufacturing activity. The group director and partner at Al Maya Group noted that products such as rice, spices, pulses, and other fast-moving consumer goods (FMCG) could experience slight price adjustments if supplier costs increase. “However, the weaker rupee alone is not the main driver of price changes; other market dynamics have a far greater impact on final export costs,” he explained.
Dr. Dhananjay Datar added that everyday staples like lentils, flour, spices, and FMCG items have been steadily experiencing inflation due to rising production costs in India.
“While the exchange rate provides some relief, manufacturers’ expenses, along with logistics and regulatory costs, still push shelf prices higher. We strive to absorb as much of this increase as possible to shield customers, but some price adjustments are inevitable,” said Dr. Datar — widely known as the ‘Masala King’ for his prominent role in India’s spice market.
He highlighted that items such as premium spices, edible oils, branded packaged foods, ready-to-eat meals, ghee, and selected FMCG products are more likely to see noticeable price increases.
