According to a new analysis released by credit ratings firm CRISIL, recent events in Bangladesh have not had a major impact on trade with India. Going forward, the impact would vary depending on industry and sector-specific subtleties.
“While ship breaking, jute, and ready-made garments (RMG) should benefit, industries like fast-moving consumer goods (FMCG), cotton yarn, power, footwear, and soft baggage may experience a slight but manageable negative impact.” The analysis further stated that the impact will be negligible for the majority of others.
The research also states that there won’t be any immediate effects on India Inc.’s credit quality. The report stated, “Yet, a protracted disruption may have an impact on the working capital cycles and revenue profiles of certain export-oriented industries for which Bangladesh serves as a hub or a demand centre.”
Businesses that manufacture footwear, FMCG products, and soft luggage may also be impacted due to Bangladeshi production facilities. The first part of the crisis presented operational issues for these institutions.
Though a complete ramp-up and the capacity to sustain their supply chain will be crucial, the majority have now started operating, according to CRISIL’s research.
Bangladesh makes up only 2.5 per cent of India’s overall exports and 0.3 per cent of its total imports in the most recent fiscal year.
Bangladesh contributes for 8–10 per cent of sales for cotton yarn players, hence big exporters’ revenue profiles may be impacted, per CRISIL. The ratings agency stated that “their ability to compensate for sales in other geographies will be an important monitorable.”
