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Bangladesh Protest(Photo: Reuters)
After widespread protests over job quotas killed 133 people in Bangladesh, affecting the business and operations of Indian companies as well, a Supreme Court intervention on Sunday came as a relief for the Indian majors. Companies with factories in Bangladesh, such as Emami and Indofil Industries, had to shut their units due to the protests and curfew.
According to data from the High Commission of India in Bangladesh, major Indian companies that have invested in the neighbouring country include Marico, Emami, Dabur, Asian Paints, Pidilite, Godrej, Sun Pharma, Tata Motors, and Hero MotoCorp. Any further escalation of the crisis would have directly or indirectly affected these companies. On the other hand, the unrest in the neighbouring country may well turn out to be an opportunity for India’s textile sector. India’s textile hub Tiruppur is expecting a 10 per cent rise in orders due to the ongoing political turmoil and its long-term impact on the confidence of major brands from the US and Europe in that country.
On Sunday, the Bangladesh Supreme Court scrapped most of the quotas on government jobs that had sparked student-led protests. The court’s Appellate Division dismissed a lower court order that had reinstated the quotas, directing that 93 per cent of government jobs will be open to candidates on merit without quotas, according to reports.
Kolkata-based Emami has a company-owned manufacturing unit at Gazipur in Bangladesh. When asked about this, the company director Prashant Goenka said, “Our plant is currently shut due to the prevailing environment. Like every other business in Bangladesh right now, we are also impacted. We hope that normalcy returns soon.”
Indofil Industries exports crop protection chemicals to Bangladesh. The bulk material is packaged at a factory 30 km from Dhaka and marketed there. “The factory is now shut and we cannot pack our existing bulk into packed stock. Even the import of bulk has been impacted due to the present situation. We believe that the current situation will be resolved. But if it persists, then the crop in Bangladesh will be impacted,” said Jayanta Chakraborty, consultant for Bangladesh at Indofil Industries. Bangladesh is significantly dependent on India and China for crop protection chemicals.
The loss due to the violent protests in Bangladesh to its economy was pegged at Taka 6,500 crore a day (over Rs 4,600 crore), said a local media report citing the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). “Trade has been growing rapidly on the import and export front. Bangladesh is strong in garments, the rest of its demand is met by other countries including India. But currently, bilateral trade has suffered seriously because of the growing unrest and there is a standstill on both sides with the curfew,” said Sumit Goyal, chairman, CII Eastern Region, International Trade Committee.
Work at major land borders has slowed down, impacting trade in a big way. And with the shutdown of internet services, there is little communication between business partners. “We are hoping that it gets resolved soon. Otherwise, it will impact Indian exports in a major way,” he added. Bangladesh is India’s biggest trade partner in South Asia and India is the second biggest trade partner of Bangladesh in Asia. Bangladesh exported $1.97 billion of goods to India in FY 2023-24. During the same year, the total bilateral trade was reported as $14.01 billion.
The automobile sector, in which India has major exposure to that country through sales, sees this as a ‘temporary’ blip. Bangladesh features in one of the key destinations for Indian auto exports apart from African and Latin American countries. Maruti Suzuki, which exports around 18 models to around 100 countries, said that their exports are ‘well-diversified.’
Rahul Bharti, executive director, corporate affairs, Maruti Suzuki, told Business Standard, “Our car exports are well diversified across about a hundred countries. A good chunk is to far-off countries like Latin America so we are hardly impacted by the Bangladesh issue.” Similarly, Bajaj Auto, which exports almost 1.5 million units a year (primarily to Africa), also said that the current Bangladesh situation is a ‘temporary’ blip. Rakesh Sharma, executive director, Bajaj Auto, said that while the current turn of events in the neighbouring country is ‘unfortunate,’ he felt it is temporary. Tata Motors also has a major presence in the country through its dealership networks. A message to Abdul Matlub Ahmad, chairperson of Nitol Niloy Group, which imports and distributes Tata Motors vehicles in Bangladesh, was unanswered.
Amid the crisis, India’s textile industry, which is facing tough competition from Bangladesh, is seeing an opportunity. “We expect a 10 per cent rise in our orders due to this crisis,” said K M Subramanian, president of the Tiruppur Exporters Association.
First Published: Jul 21 2024 | 5:01 PM IST
