India-Bangladesh Trade At Risk Amid Political Turmoil

Amid the ongoing political unrest in Bangladesh, the trade between India and Bangladesh, which has been strong for years, is facing challenges. Both countries have been major trading partners, engaging in a wide exchange of goods and services.

In FY 2023-24, the total trade between India and Bangladesh was Rs 1,35,285 crore, with India holding a significant trade surplus.

"India has a strategic interest in a stable and strong Bangladesh, supporting its economic stability and hoping for peace in the region. As Bangladesh experiences political turmoil, it is essential for all its political factions to protect garment and other factories and keep supply lines open across the border to sustain trade and economic activity," said Ajay Srivastava, founder of the Global Trade Research Initiative.

According to the Ministry of Commerce, India exported goods worth Rs 91,614 crore to Bangladesh during this period, while it imported goods worth Rs 15,268 crore from Bangladesh. This resulted in a trade surplus in favour of India of Rs 76,346 crore. The data highlights Bangladesh's role as a crucial trading partner for India, and any disruptions will impact the economies of both countries.

India's exports to Bangladesh include a diverse range of products, such as cotton yarn, petroleum products, oil meals, spices, and auto components. The current political unrest in Bangladesh threatens these exports, particularly impacting the cotton yarn sector. Indian cotton farmers could be affected if trade disruptions occur. If exports decrease, it could lead to an oversupply of cotton in India, which may lower prices and hurt farmers' incomes.

On the other hand, India imports several essential commodities from Bangladesh, including ready-made garments (RMG) made of cotton, aircraft and spacecraft parts, jute, leather footwear, and marine products. The RMG sector is especially important, as Bangladesh is a major global exporter of these garments.

Any interruption in the supply of these goods could affect India's textile and garment industries, which depend on these imports for production. Moreover, the Indian aerospace sector, which imports specialized parts from Bangladesh, could also face supply chain issues.

"India's exports, such as wheat, rice, lentils, onions, spices, sugar, oil cake, and electricity, are crucial for the people. Any disruption in supplies will lead to a massive price rise in Bangladesh and inconvenience to people," added Srivastava.

The ongoing political turmoil in Bangladesh not only disrupts current trade activities but also creates uncertainty about future economic cooperation between the two countries. Given Bangladesh's importance as a trading partner, continued instability could lead to a prolonged reduction in trade volumes.

If the situation persists in the long run, it might force Indian businesses to seek alternative markets or suppliers, which could be challenging. The current scenario highlights the importance of political stability for maintaining strong economic ties and the potential consequences when such stability is lacking. (ANI)