Wed Sep 18 05:09:59 UTC 2024: ## Bangladesh Political Unrest Has Limited Impact on Indian Trade, Says Crisil

**New Delhi:** Recent political unrest in Bangladesh is not expected to significantly impact India’s overall trade with the country, according to Crisil Ratings. While some industries may experience minor disruptions, the agency does not foresee any immediate threat to Indian companies’ credit quality.

“The impact will vary based on industry or sector-specific nuances and their trade exposure,” a Crisil statement explained. “However, a prolonged disruption can affect the revenue profiles and working capital cycles of some export-oriented industries for which Bangladesh is either a demand centre or a production hub.”

Sectors like cotton yarn, power, footwear, soft luggage, and fast-moving consumer goods (FMCG) might witness a slight negative impact, while ship-breaking, jute, and readymade garments are anticipated to benefit. For most other industries, the impact is expected to be insignificant.

India’s trade with Bangladesh is relatively low, representing just 2.5% of total Indian exports and 0.3% of total imports in the previous fiscal year. Key exports include cotton and cotton yarn, petroleum products, and electric energy, while imports primarily consist of vegetable fat oils, marine products, and apparel.

Crisil highlighted that cotton yarn exporters, who rely on Bangladesh for 8-10% of their sales, could experience revenue fluctuations. Their ability to compensate for sales in other markets will be crucial.

Companies with manufacturing facilities in Bangladesh, like those in footwear, FMCG, and soft luggage, may also face challenges. While most facilities have resumed operations after initial disruptions, maintaining supply chains and achieving full production capacity will be crucial.

Engineering, procurement, and construction (EPC) companies involved in power projects in Bangladesh might encounter execution delays this year due to workforce reductions. With a gradual return of workers expected, their revenue could be lower than previously predicted.

Crisil emphasized that it will continue to monitor the situation and evaluate its impact on credit quality.

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