Bangladesh crisis: India’s trade scene not to be hit, says S&P Global

The Bangladesh political crisis that has led to violent riots is unlikely to have an effect on India’s overall trade situation in the rest of the fiscal year 2024-’25, said S&P Global Ratings on Tuesday. The observation is pertinent because Bangladesh is India’s biggest trade partner in South Asia while India is Bangladesh’s second-biggest trade partner in Asia.

“India is a well-diversified exporter to the entire world. Its trade profile is significantly larger than bilateral trade relationships with economies like Bangladesh. Whatever the impact is going to be, is really quite unlikely to have a meaningful impact on its overall trade position for the fiscal year. Its external position is quite strong in the country and is a net creditor to the world by our calculation,” Andrew Wood, Director, Sovereign and International Public Finance Ratings (Asia-Pacific), S&P Global Ratings, said during a webinar.

According to S&P Global observation, domestic conditions in Bangladesh during this period is expected to be weak, which would mean less exports to the country from all over the world including India.

EXPORT-IMPORT DIP IN FY24

India’s main exports to Bangladesh are iron and steel, motor vehicles, refined petroleum oil, chemicals, sugar, tea, coffee, spices, confectionary and vegetables, while primary import from Bangladesh include fish, leather, apparel and plastic.

India’s exports to Bangladesh dropped from $12.21 billion in the fiscal year 2022-’23 (FY23) to $11 billion in the fiscal year 2023-’24 (FY24). Imports fell from $2 billion in FY23 to $1.84 billion in FY24.

Despite the current drop in trade, Bangladesh is a significant market for over a dozen listed Indian companies. These include Marico, Emami, Britannia, Bajaj Auto, Dabur, Asian Paints, Godrej Consumer Products, Pidilite, Jubilant Foodworks, Bayer, GCPL, Pearl Global Industries and Vikas Lifecare. Most of these companies are currently assessing their situation in Bangladesh.

Shares of Marico Limited notably dropped 4.41 per cent on Tuesday after erstwhile Bangladesh Prime Minister Sheikh Hasina resigned from her position and fled the country to seek refuge in India, following three weeks of violent protests over job reservations that has claimed over 300 lives. Marico derives nearly 11 per cent of consolidated business revenue from Bangladesh.

Among other major Indian players is Emami, with 6 per cent of the company’s revenue coming from Bangladesh. Meanwhile, Life Insurance Corporation (LIC) of India has shut down its offices in Bangladesh till August 7.