India’s robust export diversification has positioned it to weather the storm caused by the current political turmoil in Bangladesh, according to S&P Global Ratings. Despite the unrest, India’s trade position is unlikely to experience a significant impact for the year.
Andrew Wood, Director of Sovereign and International Public Finance Ratings (Asia-Pacific) at S&P Global Ratings, highlighted that India’s global trade profile significantly overshadows its bilateral trade relations with Bangladesh. This resilience stems from India’s extensive export network reaching across the world.
Bangladesh has been experiencing its most severe political unrest since its independence, triggered by widespread protests over a controversial job quota bill. The protests escalated, leading to Prime Minister Sheikh Hasina’s resignation and departure from the country. General Waqar-uz-Zaman, Bangladesh’s army chief, announced the formation of an interim government to manage the country’s affairs.
S&P Ratings anticipate weakened domestic demand conditions in Bangladesh, potentially leading to a decline in exports to other countries, including India. However, Wood emphasized the limited impact on India’s overall trade position due to the country’s strong external position and its status as a net creditor to the world.
Bangladesh holds a significant position as India’s largest trade partner in South Asia, while India ranks as Bangladesh’s second-largest trade partner. During the 2023-24 financial year, India’s exports to Bangladesh declined by nearly 10% to $11 billion, compared to $12.21 billion in the previous year. Imports also experienced a drop of 8% to $1.84 billion at the end of the financial year, down from $2 billion in the preceding year.
India’s exports to Bangladesh encompass a wide range of products, including vegetables, coffee, tea, spices, sugar, confectionery, refined petroleum oil, chemicals, cotton, iron, steel, and vehicles. In return, India imports items like fish, plastic, leather, and apparel from Bangladesh.
