The Business Bytes
JAYAJIT DASH
THE sudden ouster of Sheikh Hasina as Bangladesh’s Prime Minister has sent shockwaves through the subcontinent, with implications that stretch far beyond the borders of this besieged nation. As the dust settles on the violent protests that led to her resignation, a stark reality emerges: the tremors of this political earthquake will be felt acutely in India’s corridors of power and boardrooms alike.
A Partnership in Peril
For over a decade, Sheikh Hasina has been the architect of a robust India-Bangladesh relationship, one that has yielded dividends on multiple fronts. From eradicating anti-India terrorist groups to fostering unprecedented economic ties, her tenure has been marked by a steady deepening of bilateral cooperation. The $13 billion bilateral trade in FY 2023-24 stands testament to this burgeoning partnership. But with Hasina’s exit, this carefully constructed edifice now stands on shaky ground.
The Cotton Connection
Bangladesh isn’t just another trading partner for India; it’s the crown jewel of its cotton exports. Accounting for a staggering 34.9 per cent of India’s total cotton exports, valued at $2.4 billion in FY24, Bangladesh’s textile industry has been a reliable customer for Indian cotton producers. The political turmoil threatens to unravel this symbiotic relationship, potentially leaving a gaping hole in India’s export ledger.
Corporate India’s Bangladesh Exposure
The ripple effects of the crisis are already visible in the Indian stock market. Shares of companies with significant Bangladesh exposure, such as Marico, Pearl Global Industries, and Emami, have taken a hit. With Bangladesh contributing 11-12 per cent of Marico’s revenue and a quarter of Pearl Global’s, the stakes are high. The list of Indian companies with a footprint in Bangladesh reads like a who’s who of corporate India: Asian Paints, Pidilite, Jubilant Foodworks, Bajaj Auto, and more. Each now faces an uncertain future in a market they’ve invested heavily in.
The FTA Dream Deferred?
Perhaps the most significant casualty of this political upheaval could be the nascent Free Trade Agreement (FTA) discussions that began in October 2023. The promise of an FTA was tantalizing: a potential 182 per cent increase in Bangladesh’s exports to India and a 172 per cent boost for Indian exports to Bangladesh. This game-changing agreement now hangs in limbo, its fate tied to the whims of an interim government and whatever dispensation follows.
Infrastructure: The Bridge at Risk
Infrastructure development has been a cornerstone of India-Bangladesh cooperation under Hasina. With $8 billion in credit lines extended since 2016, projects like the Akhaura-Agartala cross-border rail link have been transforming the region’s connectivity landscape. These projects, vital for India’s access to its northeastern states, now face an uncertain future. The strategic importance of these links cannot be overstated, especially given the vulnerability of the narrow “Chicken’s Neck” corridor connecting mainland India to the Northeast.
A Silver Lining for Some?
Interestingly, the crisis presents an unexpected opportunity for some Indian sectors. Textile and garment manufacturers in India have seen their stock prices soar, with companies like Gokaldas Exports and KPR Mill experiencing double-digit gains. The market seems to be betting on these Indian firms capturing the market share that might be lost by their Bangladeshi counterparts in the wake of the unrest.
The Road Ahead: Navigating in Fog
As Bangladesh navigates this period of political flux, the future of India-Bangladesh economic ties hangs in the balance. The interim government’s stance on existing agreements, ongoing projects, and future collaborations remains a big question mark. Will they honor the commitments made by Hasina’s government? Or will we see a recalibration of Bangladesh’s economic and strategic priorities?
For Indian policymakers and business leaders, the coming months will require a delicate balancing act. They must work to safeguard existing investments and trade relationships while remaining agile enough to adapt to the new realities that emerge. The challenge will be to maintain the momentum of economic cooperation without the benefit of the personal rapport that existed between the leadership of both countries under Hasina’s tenure.
Sheikh Hasina’s exit marks the end of an era in India-Bangladesh relations. The economic ties nurtured over the past decade face their sternest test yet. As Bangladesh charts its new political course, India must brace for impact while remaining engaged and open to new possibilities. The story of India-Bangladesh economic relations is far from over, but its next chapter promises to be one of its most challenging yet.In the vast spool of international relations, a single thread may fray, but the overall design can still hold strong – if we’re willing to do the work to mend it.
(Jayajit Dash is a compelling content writer who revels in writing at the intersection of technology and policy ecosystems, has the flair to project emerging technologies in an intelligible light for the benefit of the lay reader. He is currently engaged as a Senior Manager (Corporate Communications) with Bhubaneswar-headquartered IT consulting company CSM Technologies.)
