India-Bangla trade: India keeping an eagle eye

The dishonourable fall of an honourable leader of Bangladesh, Sheikh Hasina points to a sad state of affairs for the Prime Minister of a nation she ruled for over 15 years. She had to flee and seek refuge at least temporarily in India.

It is disturbing to note that a PM whose father the Late Sheikh Mujibur Rahman popularly known as Bangabandhu, had fought against West Pakistan to earn independence for Bangladeshis had to meet this fate.

On August 9,the 84-year-old Nobel laureate Muhammed Yunus, the man Hasina hated and called him “Blood Sucker,” took over the reins of the interim government of Bangladesh.

For India, which helped create this nation after a 13-day war with Pakistan in 1971, it’s a bit tricky affair considering the geopolitical-economic situation particularly in trade relations.

The dramatic development in the neighbouring country has created some ripple effect on trade relations with India. India, and India Inc. are cautiously watching the situation. In the historical context, India and Bangladesh share deep historical, cultural, linguistic and trade ties.

The total trade turnover between these two countries in FY23 reached $14.22 billion. India exported 6,052 commodities to Bangladesh, with exports amounting to $12.20 billion in FY23 and $16.15 billion in FY22. Major exports from India to Bangladesh include cotton yarn, petroleum products, and other commodities.

Main products exported by India to Bangladesh include mineral fuels, oils, distillation products: value $2.19 billion. Cotton: value $2.18 billion. Residues, wastes of food industry, animal fodder: $733.42 million. Vehicles other than railway, tramway: value $593.97 million.

Machinery, nuclear reactors, boilers: value $552.41 million. Imports from Bangladesh to India stood at $2.02 billion in FY23, with significant items being RMG cotton (Bangladesh is the world's second-largest exporter of RMG products), spices, non-knit men's suits ($195 million), vegetable oils ($163 million), and textile scraps ($133 million).

 The trade balance is heavily in favour of India, with Bangladesh's exports to India growing at an annualised rate of 27.7% over the past five years. A recent notable development between these countries include the resolution of long-pending land and maritime boundaries, hi-tech collaborations (electronics, cyber-security, space, etc.), and an increase in bilateral trade.

However, the political unrest in Bangladesh may impact trade between the two countries in the short term. Bangladesh is India's 25th largest trading partner. It is also interesting to note that in 2023-24, Petrapole facilitated trade worth Rs 30,421 crore which was 43% of the trade facilitated through integrated check posts.

Dawki check post facilitated trade worth Rs 133 crore in the same period. Five integrated check posts are operational in West Bengal, Assam, Tripura and Meghalaya. According to Land Port Authority of India (LPAI) Petrapole land port is South Asia’s busiest and largest land port, accounting for about 30% of trade between India and Bangladesh.

Similarly, Srimantapur in Agartala connects with Cumila on the Bangladesh side. So, the land ports are crucial and any geopolitical disturbance can have an impact because the land ports have the potential of multimodal connectivity particularly in the context of Indo-Bangla trade where there is water jetty on Gomti River that flows from India to Bangladesh.

The development of Srimantapur port has strategic significance to boost India-Bangladesh trade. Although, there are some worries for India Inc, the Indian textile sector sees an opportunity in this crisis.

Last Tuesday shares of Indian textile makers surged with the hope that they might benefit from the changed situation. Biswasjit Dhar, economist says India’s exports of electricity, onion, and other agricultural products may not be affected significantly.

As the Dhaka crisis has cast a cloud on trade, India is keeping an eagle eye and is carefully monitoring the unfolding of events in Bangladesh, both on the trade and security front.