Amid the ongoing political turmoil in Bangladesh, the longstanding trade relationship between India and Bangladesh is encountering obstacles. The two countries have enjoyed a robust trading partnership, exchanging a diverse range of goods and services over the years.
In the fiscal year 2023-24, trade between India and Bangladesh amounted to ₹1,35,285 crore, with India maintaining a notable trade surplus.
Ajay Srivastava, founder of the Global Trade Research Initiative, remarked, “India has a strategic interest in a stable and prosperous Bangladesh, as it supports regional economic stability and peace. With the current political unrest in Bangladesh, it is crucial for all political factions to safeguard garment and other factories and ensure the continuity of supply lines across the border to sustain trade and economic activity.”
The Ministry of Commerce reports that India exported goods worth ₹91,614 crore to Bangladesh during this period, while imports from Bangladesh totalled ₹15,268 crore. This created a trade surplus for India of ₹76,346 crore. The data underscores Bangladesh’s significant role as a trading partner for India, with any disruptions potentially affecting both economies.
Indian exports to Bangladesh cover a wide array of products, including cotton yarn, petroleum products, oil meals, spices, and auto components. The current unrest threatens these exports, particularly impacting the cotton yarn sector. Indian cotton farmers could face challenges if trade disruptions occur, potentially leading to an oversupply of cotton in India, which could depress prices and affect farmers’ earnings.
Conversely, India imports several vital commodities from Bangladesh, such as ready-made garments (RMG) made of cotton, aircraft and spacecraft parts, jute, leather footwear, and marine products. The RMG sector is especially crucial, as Bangladesh is a major global exporter of these garments.
Disruptions in the supply of these goods could impact India’s textile and garment industries, which rely on these imports for production. Additionally, the Indian aerospace sector, which imports specialised parts from Bangladesh, could experience supply chain issues.
Srivastava added, “India’s exports of wheat, rice, lentils, onions, spices, sugar, oil cake, and electricity are vital for the people. Any disruption in these supplies would lead to significant price hikes in Bangladesh and inconvenience for its population.”
The ongoing political unrest in Bangladesh not only affects current trade activities but also introduces uncertainty about future economic collaboration between the two nations. Given Bangladesh’s significance as a trading partner, prolonged instability could result in a sustained decline in trade volumes.
If the situation endures, Indian businesses may need to explore alternative markets or suppliers, which could pose challenges. The current scenario highlights the critical role of political stability in maintaining strong economic relations and the potential repercussions of its absence.
