“Sectors such as fast moving consumer goods (FMCG), cotton yarn, power, footwear and soft luggage may see a small but manageable negative impact, while ship breaking, jute, readymade garments (RMG) should benefit. For most others, the impact will be insignificant,” the report noted.
According to the report, there will be no near-term impact on the credit quality of India Inc either. “However, a prolonged disruption can affect the revenue profiles and working capital cycles of some export-oriented industries for which Bangladesh is either a demand centre or a production hub,” it said.
Companies into footwear, FMCG and soft luggage could also see some impact because of manufacturing facilities located in Bangladesh. These facilities faced operational challenges during the initial phase of the crisis. However most have since commenced operations, though a full ramp-up and the ability to maintain their supply chain will be critical, CRISIL said in the report.
India’s trade with Bangladesh is relatively low, accounting for 2.5% of its total exports and 0.3% of total imports last fiscal.
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