The ongoing political turmoil in Bangladesh is posing significant challenges to the established trade relationship between India and Bangladesh. As key trading partners, both countries have engaged in extensive exchange of goods and services over the years.
In the fiscal year 2023-24, the total trade between India and Bangladesh amounted to Rs 1,35,285 crore, with India enjoying a notable trade surplus. Ajay Srivastava, founder of the Global Trade Research Initiative, emphasized the importance of stability in Bangladesh for sustaining trade. He stated, “During these times of political unrest, it is crucial for all political factions in Bangladesh to safeguard garment and other factories and maintain open supply lines across the border to support trade and economic activity.”
According to data from the Ministry of Commerce, India exported goods worth Rs 91,614 crore to Bangladesh during this period, while imports from Bangladesh stood at Rs 15,268 crore, resulting in a trade surplus of Rs 76,346 crore for India. This data highlights the critical role of Bangladesh as a trading partner for India, with potential disruptions having widespread economic implications for both nations.
India’s exports to Bangladesh cover a broad spectrum of products, including cotton yarn, petroleum products, oil meals, spices, and auto components. The current political unrest poses a threat to these exports, particularly affecting the cotton yarn sector. Disruptions in trade could lead to an oversupply of cotton in India, potentially driving down prices and negatively impacting farmers’ incomes.
On the other hand, 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 critical, as Bangladesh is a major global exporter of these garments. Any disruption in the supply chain could adversely affect India’s textile and garment industries, which rely heavily on these imports. Additionally, the Indian aerospace sector, which sources specialized parts from Bangladesh, could face significant challenges.
Srivastava further noted, “India’s exports, including wheat, rice, lentils, onions, spices, sugar, oil cake, and electricity, are essential for the people of Bangladesh. Any disruption in these supplies could lead to significant price increases in Bangladesh, causing inconvenience to the public.”
The current political instability in Bangladesh not only disrupts existing trade activities but also casts doubt on future economic cooperation between the two nations. Given Bangladesh’s crucial role as a trading partner, prolonged instability could result in a sustained decrease in trade volumes. This situation may compel Indian businesses to explore alternative markets or suppliers, posing additional challenges. The importance of political stability is underscored as a key factor in maintaining robust economic ties and preventing the adverse effects of instability.