Bilateral trade between Bangladesh and India decreased by 9.35 per cent in the financial year 2023-24 (April-March) due to reduced export and import activities between the two countries, according to data from the Indian Commerce Ministry.
Data from the Department of Commerce under the Indian government showed that bilateral trade between the two countries in FY24 fell to $12.90 billion, compared to $14.24 billion in FY23. The financial year in India runs from April to March.
The data indicated that Bangladesh’s exports to India in FY24 declined by 8.47 percent to $1.84 billion, down from $2.02 billion in the previous financial year. Simultaneously, Bangladesh’s imports from India decreased by 9.45 percent to $11.06 billion, down from $12.21 billion in FY23.
Experts and exporters noted that the decrease in Bangladesh’s imports from India can be attributed to the central bank’s adoption of an import contraction policy in response to the dollar crisis.
However, they expressed concern over the decline in export earnings for the country.
‘We all know that the Bangladesh Bank has adopted import contraction policy due to the dollar crisis and the overall imports of the country decreased. But it is a concerning matter that export earnings are decreasing amid the devaluation of taka,’ Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said.
He said that the devaluation of taka increased the competitiveness of export sector but it was unusual for the exports of Bangladesh’s readymade garments to have declined in India.
The Indian data showed that the country’s knitwear imports from Bangladesh in FY24 fell by 34.05 percent to $204.11 million, compared to $309.48 million in FY23.
Woven garment imports by India from Bangladesh in FY24 also declined by 11.79 percent to $391.42 million, down from $443.71 million in FY23.
Moreover, data from Bangladesh’s Export Promotion Bureau indicated that the country’s apparel exports to India in the period from July to March of FY24 decreased by 22.31 percent to $645.18 million, compared to $830.51 million in the same period of FY23.
Mustafizur Rahman commented that the decline in exports to the Indian market could be attributed to India’s focus on developing its own capacity in the sector.
Although the government allowed trade settlement between Bangladesh and India in rupees in July 2023 to alleviate pressure on the depleting foreign currency reserve and boost bilateral trade, Mustafiz stated that it had brought hardly any benefit.
He noted that it would be difficult for Bangladesh to sustain export growth in India solely through RMG exports in the future, suggesting that the country needs to diversify its export products.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, stated that global retailers had been sourcing large quantities of ready-made garments from Bangladesh for their stores in India.
However, these orders have recently decreased. He pointed out that Indian businesses have embarked on an ambitious plan to enhance their RMG production capacity with comprehensive government support, he said.
The Indian government has already introduced various incentives for businesses investing in the RMG sector, including benefits on investment, interest rates, and utility bills, Hatem added.
The Indian data also showed significant decreases in Bangladesh’s imports of other products in FY24.
Rice imports fell by 94.94 percent to $15.87 million, down from $313.36 million in FY23. Maize imports from India declined by 86.82 percent to $72.72 million, compared to $551.76 million in FY23.
Bangladesh’s sugar imports from India decreased by 74.82 percent to $118.84 million, down from $464.53 million in the previous financial year.