Bangladesh is India’s largest trade partner in south Asia as the bilateral trade between the two countries was estimated to be $14.01 billion for the fiscal year 2023-24
As protests turned into violence across Bangladesh, Sheikh Hasina, the prime minister of the country resigned her post and fled the country in a helicopter. As per media reports, she has landed at the Hindon Airbase in New Delhi after going through Tripura.
While it’s not confirmed where the PM is headed, it’s reported that Hasina and her sister are moving to a ‘safer place’ as several protesters stormed into the Prime Minister’s palace as they defied the curfew.
What was initially a peaceful protest started by students in Bangladesh on July 1 over a quota system for government jobs, soon turned violent with around 300 people killed. The country has been witnessing fierce demonstrations over the controversial quota system that reserves 30 per cent of jobs for the families of veterans who fought the 1971 liberation war.
Following her resignation, Chief of Army Staff Waker-uz-Zaman announced that the army would form the interim government in the country.
As protests spiraled out of control across the country, the army chief ordered both Army and police not to fire any shots. He urged the protestors to restraint themselves and end the violence. He vowed "justice" to everyone.
Soon after the army chief's announcement, hundreds of people flocked to the streets, celebrating Hasina's ouster. While it's difficult to estimate the actual number, it is reported that as many as 400,000 protesters went into the streets to celebrate her resignation. UN High Commissioner for Human Rights, Volker Turk, asked the country's political leadership and the security forces to abide by their obligations to protect the right to life, and the freedom of peaceful assembly and expression.
Domestic Businesses Affected Due to The Violence
Internet blackout and violence due to the protests have taken a toll on businesses in the country. As per local media reports, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) mentioned that they suffered a loss of around Rs 6,400 crore due to the ongoing scenario.
Additionally, the Bangladesh Textile Mills Association reportedly suffered a loss of $58.8 million. Amid the ongoing violence, most of the textile factories have been closed in the country.
Speaking to Business Standard, Sumit Goyal, chairman, CII Eastern Region, International Trade Committee stated, “Bangladesh is strong in garments, but the rest of its demand is met by other countries, including India. Currently, however, bilateral trade has suffered seriously because of the growing unrest. There is a standstill on both sides amid the curfew.”
Indian Businesses Impacted Due to the Violence
Indian businesses in Bangladesh have also been impacted heavily due to the violence. Public sector LIC on Monday said its office in Bangladesh will remain closed till August 7. In a regulatory filing, LIC said, "The office of LIC of Bangladesh Ltd will remain closed during the period from August 05, 2024, to August 07, 2024, due to the prevailing socio-political situation in Bangladesh."
The government of Bangladesh has declared a curfew for 3 days from August 05, 2024, to August 07, 2024, LIC said. Indian companies such as Marico, Emami, Dabur, Asian Paints, Pidilite, Godrej, Sun Pharma, Tata Motors have invested in Bangladesh. Some of these companies including Emami and Indofil Industries, reportedly halted their operations due to the ongoing violence. A tough time for the textile industry in Bangladesh, brings opportunities for India. The Indian textile industry reportedly expects a 10 per cent rise in orders due to the ongoing crisis.
How India-Bangladesh Trade Has Been Affected
When it comes to trade, Bangladesh is India’s largest trade partner in South Asia as the bilateral trade between the two countries was estimated to be $ 14.01 billion for the fiscal year 2023-24, as per data from the Ministry of External Affairs. Bangladesh’s exports to India for the fiscal year 2023-24 stood at $ 1.97 billion.
The major commodities that account for this trade includes cotton yarn and fabrics, textiles, petroleum products, pharmaceuticals, agriculture and more.
Trade between the two countries took a back seat after it was stalled for two days in July due to the ongoing violence. The Bangladeshi side of the Petrapole landport remained non-functional on July 21. Nearly one-third of land-based trade between India and Bangladesh takes place through Petrapole. Petrapole, South Asia's largest land port, is located in North 24 Parganas district in Bongaon, about 82 km from Kolkata.
While trade resumed after two days of shutdown, it remains to be seen how much loss was incurred because of this. As per IndiaToday, a loss of around Rs 30,000 crore is estimated due to the halt in trade in the Petrapole and Benapole border.
Relation Between India and Bangladesh
When the Modi led NDA government came to power for the third term this year, the Bangladesh’s PM was one of the first guests that India hosted, underscoring Bangladesh’s importance as a trade and a strategic partner.
India has had amicable relations with Bangladesh over the last few years during the regime of Modi and Hasina. During this time there has been an acceleration of bilateral talks between both the countries on connectivity, movement of goods, cross border energy and electricity.
With global trade being stalled across the world due to Russian-Ukraine war and the war in Palestine, the renewal of trade between the two countries was a necessary imperative. Recently the two countries resumed the longstanding comprehensive Economic Partnership Agreement (CEPA) and free trade agreements.
With India and Bangladesh already having an impressive trade relations, it remains to be seen, how things will be under the leadership of Chief of Army Staff Waker-uz-Zaman.
All eyes will be now on Zaman who will run the interim government now. Zaman who highlighted that he will take full leadership of the situation, reportedly said, “The country has suffered a lot, the economy has been hit, many people have been killed - it is time to stop the violence.”
(With inputs from PTI)