Ramprasad Yadav has an import export business in Maharashtra. He imported goods worth 5 billion dollars. What will happen when we increase the imports of commodities in the country?

Outflow of foreign exchange

When import of any commodity is done, there is an outflow of foreign exchange as the payment is done in the foreign currency. For example: I bought 700 barrels of oil from USA. Now, the payment will not be done in rupees, it will be done in dollars which will lead to increase in the demand of foreign currency and outflow of foreign exchange.