As Bangladesh descends into chaos, India’s trade and security hang in balance

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Mint the political crisis in Bangladesh could hinder India’s plans to boost exports to the neighbouring country. “If the situation worsens, which is highly possible, Bangladesh may stop importing Indian goods and seek other countries to meet their domestic needs," the official said, declining to be identified. Other experts said India faces losses in multiple trade segments due to the Bangladesh crisis, which could turn into opportunities for competitors like Vietnam and China.

“India will need to create strategies to compete with these countries and seize any potential market share," said Biswajit Dhar, economist and a retired professor at the Centre for Economic Studies and Planning at Delhi’s Jawaharlal Nehru University. “Bangladesh is one of the major destinations for Indian goods. After covid-19, Bangladesh was among the top five export destinations.

However, trade has declined slightly after the export ban on rice and wheat. Despite this, it remains one of India’s best trade partners," Dhar said. In recent years, Bangladesh’s economic challenges have hurt bilateral trade with India.

India’s exports to Bangladesh, which amounted to $16.2 billion in 2021-22, fell to $11.1 billion in 2023-24, declining by about 31.5%. Imports from Bangladesh have been relatively stable, increasing from $1.9 billion in FY22 to $2 billion the following year, before sliding back to $1.8 billion in FY24. “Bangladesh has been facing a severe dollar shortage, which has limited its ability to import goods, including from India.