New Delhi
Recent developments in Bangladesh have not significantly affected India’s trade, according to a report released on Tuesday. The Crisil Ratings report stated that the near-term impact on the credit quality of Indian companies is not expected to be substantial. However, long-term disruptions could impact revenue profiles and working capital cycles for some export-oriented industries where Bangladesh is either a demand center or a production hub.
India’s trade with Bangladesh remains relatively low, making up 2.5 percent of total exports and 0.3 percent of total imports in the last fiscal year. The report noted that sectors such as cotton yarn, power, footwear, soft luggage, and fast-moving consumer goods (FMCG) might face manageable negative impacts. Conversely, ship breaking, jute, and readymade garments could benefit from the situation.
Merchandise exports to Bangladesh mainly include cotton yarn, petroleum products, and electric energy, while imports consist of vegetable fat oils, marine products, and apparel. Cotton yarn exporters, who rely on Bangladesh for 8-10 percent of their sales, could see revenue effects. Footwear, FMCG, and soft luggage industries with manufacturing facilities in Bangladesh might also experience impacts, though many facilities have resumed operations.
Bangladeshi Chief Adviser Muhammad Yunus announced plans to form six commissions to reform key sectors. These commissions are expected to begin work on October 1 and complete within three months. Additionally, engineering and procurement companies in Bangladesh may face delays due to workforce issues, and companies supplying electricity could encounter payment delays.
