Bangladeshi exports to India drop due to restrictions

The restrictions imposed by India have begun to have a negative impact on the export of Bangladeshi products to the country.

In the first five months of the current fiscal year (July–November), exports of Bangladeshi goods to the Indian market fell by more than 6.5 per cent.
During this period, exports of Bangladesh’s top three products to India—ready-made garments, processed food products, and jute and jute-based products—declined.

This year, India imposed restrictions on the export of Bangladeshi goods through land ports in three phases.

Although exports of Bangladeshi products to India increased for two to three months following the restrictions, they began to decline in September.

According to the latest data from the Export Promotion Bureau (EPB), Bangladesh exported goods worth $76 million to India in the first five months of the current fiscal year, compared to $81 million in the same period last fiscal year, marking a decrease of 6.68 per cent in exports.

Exporters say that the restrictions have increased the cost of exporting goods to India and reduced competitiveness. If the situation does not improve, exports are likely to decline further in the coming days.

After the COVID-19 pandemic, Bangladesh exported goods worth $1.99 billion to India in the 2021–22 fiscal year. Exports then fell over the next two years. In the outgoing fiscal year, India was Bangladesh’s eighth-largest export market, with exports worth $1.76 billion—12 per cent higher than the previous year.

In April last year, the Bangladesh government stopped importing yarn from India through land ports. Following this, India imposed restrictions on the export of Bangladeshi goods through land ports in three phases. On 17 May and 27 June, India restricted exports of garments, food products, jute products, cotton-yarn waste, plastic products, and wooden furniture, and on 11 August, it imposed further restrictions on certain jute products. India has also started an investigation to impose anti-dumping duties on Bangladeshi jute products.

Under the restrictions, jute and garment products from Bangladesh cannot be exported to India via land ports. They must be exported only through the Novoseva port in Mumbai. For food products and soft drinks, wooden furniture, cotton-yarn waste, and plastic products, exports are allowed only through land ports connected to West Bengal, except for Burimari and Banglabandha.

Ready-made garments are Bangladesh’s largest export to India. In the first five months of the current fiscal year, nearly $30 million worth of garments were exported, compared to $32.5 million in the same period last year, a decline of 8.8 per cent.

Entrepreneurs in Bangladesh’s garment industry say that due to the 50 per cent retaliatory duty, Indian buyers are reducing their orders from the US market, offering lower prices to local companies. The Indian government has also allowed exporters to sell products in the domestic market without GST. Meanwhile, foreign brands produce goods in Bangladesh for the Indian market, but Indian producers are offering these brands lower prices. Shipping products by sea from Bangladesh is time-consuming and costly, which is also reducing garment exports to India.

Shovon Islam, Managing Director of the Sparro Group of Industries, told Prothom Alo that garment exports to India are likely to decline further under the current conditions. Due to the restrictions, local Indian entrepreneurs are taking most of the purchase orders in the market.
Processed food products are Bangladesh’s second-largest export to India. During July–November of the current fiscal year, processed food exports were worth nearly $10 million, a decline of 13 per cent compared to the same period last year.

Kamruzzaman Kamal, Director of Marketing at PRAN-RFL Group, told Prothom Alo that additional costs are being incurred to ship products, leaving little profit on many items. This is causing a drop in processed food exports. He added, “We hope that bilateral relations will be strengthened, land ports will be reopened, and procedures for product inspection will be simplified.”

Jute and jute-based products are the third-largest export from Bangladesh to India. In the first five months of the current fiscal year, exports were worth $5 million, a decline of 37 per cent compared to the same period last year.

Regarding this, Khondaker Golam Moazzem, Research Director of the private think tank CPD, told Prothom Alo: “Even after the Bangladesh government imposed restrictions on importing Indian yarn, the inflow of yarn from the country has increased. But exports of Bangladeshi products to India decreased after India imposed restrictions. Strategically, the export market for Bangladeshi products is limited, which makes India an important market for Bangladesh. We expect that the elected government will behave rationally in economic matters with neighbouring countries, and political issues should not always be mixed with economic relations.”