India’s exports to Bangladesh fell by 28 percent in August last month. In that month, India exported goods worth 68 million 10 million US dollars to Bangladesh. In August last year, its amount was 943 million dollars. Indian media The Indian Express reported on Wednesday (September 18) the statistics published by India’s Ministry of Commerce and Industry.
India exports more cotton to Bangladesh. According to trade statistics, India’s cotton exports to Bangladesh fell by around 10 percent in August last month. Exports in that month were $1 billion, up from $111 million in August of the previous year.
Garment orders have dropped in Bangladesh following the recent protests. This has also affected the textile industry of India. India exports raw materials and other products used in garment industry to Bangladesh.
According to the Indian Express, some foreign buyers are contacting textile factories in India about buying clothes. In this situation, the trend of decline in Indian yarn exports to Bangladesh has started.
Rating agency CRISIL, however, says the recent developments in Bangladesh have not had a significant impact on India’s trade. But if the instability in the country persists, it could lead to revenue and working capital shortages for some of India’s export-oriented industries. Bangladesh is the center of demand or production for these industries.
The magnitude of the impact will depend on how dependent the industry or sector is on export earnings, the rating agency said. We do not think this will have a major impact on the credit quality of India’s corporate sector in the near term. This issue and what the value of Bangladeshi money stands for, should be monitored.
According to Crisil, developments in Bangladesh could have a “small but manageable” impact on India’s cotton yarn, electricity, footwear, soft luggage and fast-moving commodities. However, the Indian shipbreaking industry, jute and ready-made garment industries may benefit due to this.
The organization claims that the decrease in exports to Bangladesh will not have any significant impact on India’s trade. Because India’s trade with the country is not much. In the last financial year, 2.5 percent of India’s total exports went to Bangladesh, while its import rate was only 0.3 percent.
India’s exports to Bangladesh included cotton and cotton yarn, petroleum products, electricity, etc. On the other hand, the list of imports included edible oil, marine products and clothing.
According to CRISIL data, eight to 10 percent of India’s cotton exports go to Bangladesh. Hence the revenue of major exporters in this industry may suffer. As a result, their ability to offset losses by exporting cotton to other countries may become important.
Besides, India’s footwear, fast-moving consumer goods and soft luggage sectors may also have some impact. Because many factories of such companies are located in Bangladesh.
There may also be delays in the work of Indian companies in the engineering, procurement and construction sectors engaged in power and other projects in Bangladesh. According to Crisil, a significant part of the employees of these companies returned to India a month ago.
