Wed Sep 18 03:59:51 UTC 2024: ## Bangladesh Political Unrest: Minimal Impact on Indian Businesses, Says CRISIL Ratings

**MUMBAI, INDIA -** The recent political upheaval in Bangladesh is unlikely to have a significant impact on most Indian businesses, according to a new study by CRISIL Ratings. While some sectors, like cotton yarn and footwear, could experience a minor negative effect, others, including ship breaking and readymade garments (RMG), are poised to benefit from the situation.

The study highlighted that India’s trade with Bangladesh is relatively small, accounting for just 2.5% of its total exports and 0.3% of total imports in the last fiscal year. While merchandise exports mainly comprise cotton and cotton yarn, petroleum products, and electric energy, imports consist largely of vegetable fat oils, marine products, and apparel.

While acknowledging that prolonged disruption could impact the revenue and working capital cycles of some export-oriented industries, CRISIL stated that the overall credit quality of Indian companies is not anticipated to be affected in the near term.

**Key Findings:**

* **Negative Impact:** Cotton yarn exporters could see a minor revenue impact as Bangladesh accounts for 8-10% of their sales. However, their operating profit margins may not be significantly affected due to modest cotton-yarn spreads. Footwear, FMCG, and soft luggage industries could face some challenges due to operational disruptions in their Bangladeshi manufacturing facilities. Engineering, procurement, and construction companies operating in Bangladesh might experience project execution delays and delayed payment of dues.
* **Positive Impact:** Ship breaking, jute, and RMG sectors are witnessing an increase in sales inquiries from major export markets like the US and Europe.
* **Monitoring Point:** The Bangladeshi currency taka will be a key factor to watch, as any significant fluctuations could impact businesses operating in the region.

Overall, CRISIL Ratings expects the impact of the political situation in Bangladesh on Indian businesses to be relatively minor. The agency emphasized the importance of closely monitoring the situation and its potential ramifications for various sectors.

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