Trade on road to recovery but Indian firms tread cautiously

The concluding part of the series highlights stabilising trade ties with Dhaka, but payment delays anda complex bilateral environment remain major concerns

- ISHITA AYAN DUTT

Truck movements across the India-Bangladesh border are on the rise, with increasing rentals signaling a trade recovery between the two South Asian nations. Yet, geopolitical tension looms large, with Bangladesh now under an interim government for nearly two months.

Indian businesses are seeing improvements in their operations on a month-on-month basis, with the flow of goods to and from Bangladesh slowly normalising. Still, two primary concerns persist - payments from Bangladesh and safety of Indian executives travelling there. Resuming the relative stability experienced under the previous Sheikh Hasina regime remains a work in progress.

Hasina, after weeks of violent protests by students and other groups that killed over 600 people, resigned as Bangladesh prime minister and fled to India on August 5. Since then an interim government under Muhammad Yunus has been established.

Consider this: In mid-August, a South Indian businessman received an order for 20 containers of pulses from Bangladesh. Despite a business relationship spanning 15 years, he hesitated to proceed, citing political uncertainty in India's eastern neighbouring country as his main concern. "Though exports are back to around 80 per cent, what exporters lack is confidence," he said.

According to trade policy analyst S Chandrasekaran, exports are currently at 75-80 per cent of pre-crisis levels. "Trucks are moving again, but it's (trade is) not yet back to where it was," he said. For exporters, the key question remains: "Will I get my money?"

Bangladesh's foreign exchange reserves are under pressure, which could delay payments to Indian companies for goods and services, flagged Anuj Sethi, senior director at CRISIL Ratings. "This could extend the working capital cycle for Indian corporates," he explained.