Indian companies closely monitoring Bangladesh situation, concerned by political uncertainty
Vikram Kasat, Head of Advisory at PL Capital, said that the turmoil in Bangladesh is indeed worrying. “While we hope for an amicable resolution between the government and students, we are concerned about the Indian corporates operating in Bangladesh. Some of the notable names that come to mind are VIP, Emami, Marico, Dabur, Asian Paints, Pidilite, Tata Motors, and Hero MotoCorp, all of whom have significant operations there,” added Kasat.
Adani Group company Adani Power, which supplies 1,495 MW of electricity to Bangladesh from its Godda (Jharkhand) plant, said it continues to supply electricity to the country.
“Adani Power has a power purchase agreement with the Bangladesh power distribution utility, namely Bangladesh Power Development Board (BPDB), to meet their power requirement. In its normal course of business, BPDB is scheduling the power supply to meet their demand and as per that schedule, Adani Power continues to supply power to the Bangladesh power utility without any disruption. Going forward too, we will remain guided by BPDB’s schedule and as per the provisions of the PPA between the two utilities,” said an Adani Power spokesperson.
Arun Kumar Garodia, chairman of Engineering Export Promotion Council, said the ongoing political uncertainty may further worsen the situation and impact engineering exports to the neighbouring country. “The political developments in Bangladesh are a significant concern for Indian engineering exporters. As one of the top destinations for Indian engineering products and our largest trading partner in South Asia, stability in Bangladesh is crucial for maintaining and expanding trade relations,” added Garodia.
Think tank Global Trade Research Initiative (GTRI) said that during the fiscal year 2022, India’s exports to Bangladesh amounted to $16.2 billion. However, by FY2023, these exports had decreased to $12.2 billion and further declined to $11.1 billion in FY2024. This represents a significant drop of 31.5% in exports from FY2022 to FY2024.
On the other hand, India’s imports from Bangladesh have been relatively stable, starting at $1.9 billion in FY2022 and slightly increasing to $2.0 billion in FY2023, before slightly decreasing to $1.8 billion in FY2024. This marks a modest decrease of 5.3% in imports over the same period.
“The key reason for declining trade is Bangladesh’s severe dollar shortage, which has limited its ability to import goods, including those from India. The rising inflation in the country has also reduced domestic demand, leading to lower consumption of both local and imported products,” said GTRI.