Indian exports, small businesses hit by Bangladesh unrest
Al Jazeera :
Last year, Aditya Manaksia started exporting food products to Bangladesh in an attempt to expand his business.
Now, the 43-year-old Kolkata-based exporter of agro products is nervously watching the continuing political turmoil in the neighbouring country that broke out in July as a protest against job quotas and has since led to the overthrow of former Prime Minister Sheikh Hasina on August 5.
More than 300 people have lost their lives in the weeks-long mayhem that has also seen massive destruction of property.
Manaksia exported spices, coconuts and pasta worth $10,000 to Bangladesh in the financial year ending March 2024 with the hope of making good money. “I was looking to expand my business there. But all my hopes are dashed due to the political unrest. I don’t know what lies ahead. We can just pray for the situation to turn normal as soon as possible,” Manaksia told Al Jazeera.
Rajeev Goenka, a Kolkata-based entrepreneur who has an apparel manufacturing unit in Dhaka says that the current situation has hit him hard. Goenka’s Dhaka unit makes around three million garments a year, including jeans and shirts, but the production has come to a halt since July due to the protests.
He is trying to assure his European clients that they will meet deadlines, he said, but he is not certain he will be able to. “We even don’t know whether Bangladesh banks will offer Letter of Credit (LC) or not [needed for cross-border trade]. We have to wait and watch the situation and it is too early to comment on the total losses incurred because of the violence,” Goenka said.
India has strong trade relations with Bangladesh, which is among its top 10 export destinations. In the last financial year, it sold goods including textiles, tea, coffee, auto parts, electricity, agriculture, iron, steel and plastics worth $11.1bn and imported readymade garments, leather and leather products, among other items, for $1.8bn.
India’s exports were down in the last couple of years partly because of an Indian ban on exporting basmati rice in an effort to save it for domestic consumption and also because of Dhaka’s severe forex shortage which crimped its import capability, said Ajay Srivastava, Founder, Global Trade Research Initiative.
Srivastava, however, expressed hope that trade would turn normal soon. “They are a smart country and cannot ignore India because of the geographical closeness with us. The situation would soon return to normal if there is no interference from fundamentalists. Exporters should tread with caution and utilise Letter of Credit for doing any business dealings there,” Srivastava said.
One industry that is not worried about the recent turmoil in Bangladesh is the cotton traders.
Bangladesh is hugely dependent on India for raw cotton to supply its $47bn (exports) garment industry and Indian traders have said they expect to meet their export targets.
“We are aiming to export around [2.8 million] bales of cotton globally, out of which [2 million] bales will be sent to Bangladesh alone” in the 12 months ending in September, Atul Ganatra, president of the Cotton Association of India told Al Jazeera. One bale is 170kg (375 pounds).
Ajay Sahai, director general of the Federation of Indian Exports Organisations, told Al Jazeera that things are returning to normal across the border.
“The movement of trucks has resumed in some of the border areas and the situation is expected to turn normal soon. They [Bangladesh] are hugely dependent on us for daily food items and will start the imports soon as bringing the similar products from elsewhere will cost them dearly,” he pointed out.
However, despite such assurances of normalcy, Kaustav Palit, 55, who exports onions, ginger, tamarind and other perishable items to Bangladesh told Al Jazeera that the situation is tricky.