Indian Exporters fears to trade with Bangladesh
KOLKATA : With the reliability of letters of credit being honoured by Bangladeshi banks coming down, Indian exporters are afraid that payments against their shipments might be delayed or not be made, resulting in a significant drop in export to neighbouring Bangladesh.
Amid growing political tensions and economic instability in Bangladesh, Indian exporters are facing increasing uncertainty regarding payments for shipments, particularly as the reliability of letters of credit from Bangladeshi banks diminishes.
According to Yogesh Gupta, Regional Chairman of the Federation of Indian Export Organisations (FIEO), “Export out of India to Bangladesh has hit badly because the payment assurances have come down to a very low level.”
Gupta pointed out that fears of delayed or unfulfilled payments are leading Indian exporters to hesitate before making shipments, particularly with the Reserve Bank of India (RBI) watching closely over foreign trade and payment issues.
Current political upheaval in Bangladesh has exacerbated the nation’s banking sector’s frailties. Global rating agency Moody’s in November revised its ratings for six Bangladeshi banks, citing concerns over the country’s recent sovereign downgrade.
This downgrade has raised alarms about the sustainability of Bangladesh’s banking system, with six major Bangladeshi banks seeing their ratings revised.
As a result, exporters are becoming increasingly wary of engaging in trade with Bangladesh, where payments may not be processed as swiftly or securely.
The political volatility in Bangladesh has also had a tangible impact on cross-border trade.
While the Petrapole-Benapole route—South Asia’s largest land port for India-Bangladesh trade—remains operational, the flow of goods is expected to decrease within a month if tensions persist.
“There are fewer letters of credit being issued to traders, and Indian exporters are unwilling to ship goods due to fears of non-payment,” said Mr. Kartik Chakraborty, secretary of the Petrapole Clearing Agents’ Staff Welfare Association.
Alongside trade, the healthcare sector in Kolkata has seen a decline in Bangladeshi patients seeking medical treatment.
Private hospitals report a drop in medical and tourist visa issuances, with many patients seeking alternative routes to enter India.
However, online consultations have surged, indicating a shift in how patients are managing their healthcare needs during this period of heightened tension.
If the current political standoff continues, both trade and medical exchanges are likely to suffer further, underscoring the growing economic challenges for both nations.