Rating agency Crisil has stated that the ongoing crisis in Bangladesh is unlikely to have any significant short-term impact on Indian industries. In its recent report, Crisil pointed out that although industry-specific risks could vary, the overall credit quality of Indian companies remains unaffected for now.
Limited Trade Exposure to Bangladesh Minimizes Risks
India’s trade exposure to Bangladesh is relatively small, accounting for just 2.5% of its total exports and 0.3% of imports in the last fiscal year. Indian exports to Bangladesh mainly consist of cotton, petroleum products, and electricity, while imports include vegetable oil, marine products, and garments. Crisil’s report emphasizes that the low trade volume between the two countries reduces the likelihood of any major disruption for Indian businesses.
Industries That Might Face Challenges
While Crisil downplays any immediate risks, the agency did acknowledge that if the disruption in Bangladesh persists, some export-oriented sectors could face operational and financial challenges. Companies that manufacture footwear and daily consumption goods in Bangladesh may encounter revenue losses and working capital issues due to the crisis. These sectors experienced some disruption initially, but most production units have resumed operations.
Monitoring Bangladesh’s Currency Performance
Crisil also highlighted the importance of keeping an eye on the Bangladeshi Taka’s performance. Any significant changes in the currency could indirectly impact industries that rely on exports from Bangladesh.
Overall Outlook
While the crisis in Bangladesh caused temporary setbacks for some companies, Crisil’s report reassures that the overall impact on Indian industries remains minimal in the short term. However, the situation could evolve if the disruption continues for an extended period.
