Bangladesh crisis: Exporters explore bringing production back home

New Delhi: Worried over the situation in Bangladesh, Indian exporters with manufacturing facilities in both countries are looking at ways to fulfil all their overseas orders from India to prevent any possible trade disruption.

India's exports will also be hit as Bangladesh Prime Minister Sheikh Hasina resigned and fled the country on Monday after weeks of anti-government protests and clashes between police and protestors that claimed hundreds of lives. The army chief said an interim government will be formed to run the country.

"We are exploring the possibility of servicing our clients from India because this peak season for us and 10-day closure has already delayed the delivery of goods," said Rafeeque Ahmed, chairman of Farida Group, one of India's largest shoe manufacturers and exporters, with manufacturing facilities in both India and Bangladesh. The company expects 2-3 weeks' delay in delivery to its clients in the US and EU, he said.

A Gujarat-based apparel exporter who gets cloth and yarn from Bangladesh said exports from Dhaka are likely to stop for some time. "Either the orders would be shifted to India or clients will await resumption of normalcy in Bangladesh," the person said. "Brands will also not like to put all their eggs in one basket."

Bangladesh is India's 25th top trading partner, as per FY24 trade data. India had a $9.2-billion trade surplus with it last fiscal and goods exports to Bangladesh in FY24 were $11.06 billion and in April-May FY25, they were $1.74 billion. Top exporting items include cotton, coffee, tea, vegetables, vehicles, electrical machinery, mineral fuels, mineral oils and iron and steel.

"With the kharif harvest very near, agri export basket of over $1.8 billion could be impacted with soybean, soya bean meal, animal feed such as wheat residues, onion and rapeseed, being the worst hit," said Mohit Singla, chairman of the Trade Promotion Council of India (TPCI).

He said tremors of unrest in Bangladesh were being felt for the past few months as letters of credit were not being issued easily.

Exporters of onion, vegetable and fruit, and processed foods, especially those in Kolkata, fear a complete stoppage of trade through the land route of Benapole and Petrapole.

"Internet disruptions have hurt banking transactions and commodity exporters are worried about exports to Bangladesh through the land border," said Ajay Sahai, director general of Federation of Indian Export Organisations (FEIO). "The next 7-10 days will be crucial," he said.

Most exports to Bangladesh are subject to full tariffs and fall outside South Asian Free Trade Area (Safta) agreement while Dhaka's exports to India are concentrated in a few categories, with textiles, garments, and made-ups making up 56% of their exports. These items benefit from zero tariffs under the Safta agreement.