Crisis at the border: India’s trade takes a hit by Bangladesh crisis

Indo-Bangladesh trade has been disrupted due to political unrest in Bangladesh following large-scale protests and the resignation of Prime Minister Sheikh Hasina. As of August 4, 2024, the Bangladesh government declared a three-day trade holiday, suspending all trade activities except essential services. The halt in trade was attributed to the lack of clearance from Bangladeshi customs and the closure of the Petrapole border, the primary land port for bilateral trade. Despite initial movements, trade activities ceased following news of the resignation and departure of Bangladesh’s president.

Indo-Bangladesh trade has ‘halted’ due to unrest in the neighbouring country caused by large-scale protests that resulted in Prime Minister Sheikh Hasina’s resignation on Monday, according to traders. On August 4, 2024, the Bangladesh government issued a notification declaring a three-day trade holiday, excluding essential services.

Bangladesh is India’s largest trade partner in South Asia, accounting for 2.53% of India’s exports. Bilateral trade between India and Bangladesh amounted to US$ 12.9 billion in FY24. India’s exports to Bangladesh decreased by 9.45% YoY to US$ 11.06 billion, while imports from Bangladesh also decreased by 8.74% YoY to US$ 1.84 billion.

Ujjal Saha, secretary of the West Bengal Exporters Coordination Committee, stated that due to a lack of clearance from Bangladeshi customs at their land ports, export and import activities were halted. “There was some movement in the morning, but it eventually stopped,” he explained.

Trade was hampered by the last two days of violent protests in Bangladesh against the Sheikh Hasina government. Hasina left the country on Monday after resigning, according to multiple news reports. But there was no formal statement confirming her departure from Dhaka.

“The Bangladesh government has called for a three-day total holiday, except for essential services, and hence the Bangladeshi borders are closed for business,” as per Saha.

The current political unrest in Bangladesh threatens India’s trade relations with the country. Disruptions could affect key exports like cotton, petroleum products, and cereals, as well as India’s imports of ready-made garments. The instability may hinder discussions on a potential free trade agreement, which could have significantly boosted bilateral trade. Additionally, infrastructure projects and cross-border connectivity could face setbacks, impacting economic and strategic interests.

According to Sajedur Rahman, general secretary of the Benapole C&F Staff Association, there was some movement in the morning, but it stopped after news of the president’s resignation and departure from the country. Benapole is located on the Bangladesh side of the Petrapole border in West Bengal.