Indian import restrictions: Who will be hit hardest?

BSP Food Products, a company based in Kalurghat, Chattogram city, has been exporting food items to three of the northeastern states of India for the past one and a half years. The company has been doing business actually relying on exports to India by land.

However, the company now faces uncertainty after the Indian government on Saturday imposed certain restrictions on the import of certain goods from Bangladesh by land routes.

Ajit Kumar Das, managing director of BSP Food Products, told Prothom Alo on Monday, “Almost all of our products are exported. Our cookies, toast (rusks), and salted biscuits have a major market in Indian states of Assam, Tripura and Kolkata.”

“If we have to now send the products to Assam and Tripura via Kolkata through a longer route, the transportation costs alone will increase by Tk 100,000 (Tk 1 lakh). It is impossible for the consumers to bear this additional cost. On the other hand, if exports stop, we won’t be able to continue with production.”

Ajit Kumar Das added that prior to India imposing the restrictions their company had received an order for 42,000 cartons of food products. Though these food items have already been produced their export is now halted for the restrictions.

Many small and medium enterprises like BSP Food Products will be affected the most from the Indian import restrictions. Compared to other sectors, companies in the processed food and plastic products sectors exporting to India’s seven northeastern states, commonly known as the ‘Seven Sisters’, face higher level of risk.

Apart from that, exporting companies from the ready-made garments (RMG) sector will have to face increased competition.

Some of the exporters stated that it would be impossible to maintain competitive capabilities as the easy routes of exporting certain goods to India has been closed off. While larger companies may be able to absorb the shock, smaller exporters will not be able to do the same.

If failed to fulfill and export the existing orders, they would have to incur substantial losses. So, they urge the government to initiate discussions on the state level to quickly resolve the crisis.

Meanwhile, there’s an inter-ministerial meeting led by the ministry of commerce, scheduled this afternoon, Tuesday to determine the next course of action following India’s recent import restrictions. Secretary of commerce Md Mahbubur Rahman will be presiding over the meeting.

Representatives from the Ministry of Foreign Affairs and Ministry of Shipping, Bangladesh Trade and Tariff Commission, National Board of Revenue (NBR), and Land Port Authority alongside leaders from various business associations are expected to attend the meeting.

Land routes are the easiest way of exporting Bangladeshi goods to India. Goods can be exported faster this way and the cost is lower as well. However, the Indian government on Saturday banned import of garments from Bangladesh through land routes.

The order issued relating to this stated that, garment items can be imported from Bangladesh only using India’s Nhava Sheva port in Mumbai (western India) and Kolkata port in West Bengal (eastern India).

In addition to that, the order also prohibits the export of fruits, fruit-flavoured beverages, soft drinks, processed foods, plastic products, yarn, yarn byproducts, and furniture to the Indian states of Assam, Meghalaya, Tripura, and Mizoram via Land Customs Stations (LCS) or Integrated Check Posts (ICP). The restriction also applies to Changrabandha and Fulbari customs stations in West Bengal.

Data from the Export Promotion Bureau (EPB) indicates that in the fiscal year 2023–24, Bangladesh exported goods worth USD 44.47 billion (USD 4,447 crore) in total, with 3.75 per cent of that exported to India. This neighboring country is the ninth-largest export destination for Bangladesh.

On the opposite, Bangladesh imported goods worth around USD 9 billion (USD 900 crore) from India, which goes slightly over 14 per cent of our total imports. Bangladesh mostly imports industrial raw materials from India. According to data from the commerce ministry of India, Bangladesh it’s the eighth-largest export destination for India.

EPB data shows that, Bangladesh during the last fiscal year, exported USD 550 million (USD 55 crore) worth of ready-made garments, USD 160 million (USD 16 crore) worth of processed foods, USD 44 million (USD 4.4 crore) worth of plastic products, USD 31.3 million (USD 3.13 crore) worth of cotton and cotton yarn waste, along with USD 6.5 million (USD 65 lakh) worth of furniture to India. Major shares of these exports are transported indeed through the land ports.

In the last fiscal year, Bangladesh exported processed foods, plastic products, furniture, yarn by-products, fruits and fruit-flavoured beverages worth USD 76.6 million (USD 7.66 crore) to India through the land ports. These items were exported by 166 companies, most of which are small and medium enterprises.

A company named Starline Food Products, based in Feni, has been exporting to India’s ‘Seven Sisters’ states for the past five to six years. They exports processed food items worth Tk 2.5 to 3 million (Tk 25 to 30 lakh) to India per month. Apart from India, the company exports goods worth an average of Tk 20 million (Tk 2 crore) monthly to London in UK and to various other Middle Eastern countries as well.

Md Moin Uddin, director of Starline Food Products told Prothom Alo, “We currently have export orders for processed food products worth Tk 3 to 3.5 million (Tk 30 to 35 lakh) from India. We are worried over the imposition of restriction on the export of these goods through land routes. There’s growing uncertainty regarding, whether the Indian buyers will accept shipments through alternative routes or even place orders in the future.”

Another company named Bikrampur Plastic, based in Kamrangirchar area of Old Dhaka has been exporting household plastic items and plastic furniture to India’s ‘Sven Sisters’ states  for four to five years. Currently they have export orders worth USD 14,000 to 15,000 in their hand.

When asked, Abu Bakar Siddique, assistant general manager of Bikrampur Plastic told Prothom Alo, “India is a major export market for our products. A significant risk factor has now been created in export because of the restrictions.”

PRAN-RFL Group is one of the major exporters of processed foods and plastic products in Bangladesh. The conglomerate exported goods worth USD 50 million (USD 5 crore) to India in the last fiscal year. Of that, goods worth USD 33.8 million (USD 3.38 crore), accounting for 68 per cent of their total export to India, was transported by land routes.

Due to the recent restrictions, a shipment of 17 trucksloads of their products was stuck at the Burimari–Changrabandha land port while, two more of their trucks were stuck at the Sheola land port in Sylhet this Sunday. The company has brought those trucks back to Dhaka.

Kamruzzaman Kamal, director of marketing at PRAN-RFL Group told Prothom Alo, “Currently we have pending export orders worth USD 6 million (USD 60 lakh) in our hand. Given the changing situation, we have slowed down the production of these products.”

In the last fiscal year, Bangladesh exported ready-made garments (RMG) worth USD 555.7 million (USD 55.57 crore) to India. As much as 76 per cent of this export was shipped through the land ports. About 530 Bangladeshi companies exported garments through the land ports.

There are many small and medium enterprises alongside major industrial corporations among them. Apart from shirts, trousers, and T-shirts, Bangladesh also exports items like saris and lungis to India.

A company named Jamdani Trends, based in Sonargaon of Narayanganj, exports handloom-produced Lungi and Shari to India every year through the land ports. Owner of the company, Shahidur Rahman told Prothom Alo that they were supposed to export a consignment of lungis and saris this week through the Bhomra land port, but the shipment is stranded now.

The exporters get small-sized weaving factories located across the country to produce the sari and lungi. Mentioning this Md Salahuddin, president of the Bangladesh Weavers Products and Manufacturers Business Association, told Prothom Alo that most of the workers in these weaving factories are women.

The small-scale weaving factories will now be in trouble because of the Indian government’s decision. Notably, Bangladeshi handloom products had made a strong position in the Indian market due to its low cost, he added.

Khondaker Golam Moazzem, research director at the non-government research organisation Centre for Policy Dialogue (CPD), told Prothom Alo that the matter of the Indian restrictions is related to politically tensions. So, there should be emphasis on finding a political solution to this political concern. There needs to be an open dialogue between the two countries as fast as possible, he commented.