Bangladesh’s Political Crisis May Impact India’s Cotton Exports
Despite the ongoing political turmoil in Bangladesh, the impact on India’s overall trade may be minimal. However, the crisis is expected to significantly affect India’s cotton sector, according to an analysis by Moneycontrol.
India exports $2.4 billion worth of cotton to Bangladesh, a country that has rapidly established itself as a global textile hub. Data from the Ministry of Commerce indicates that Bangladesh’s share of India’s cotton exports has surged, doubling from 16.8% in FY13 to 34.9% in FY24. In fact, raw cotton exports made up a quarter of India’s total exports to Bangladesh in FY24.
In FY24, Bangladesh emerged as the top destination for India’s cotton exports, receiving more than twice the volume of exports as China, the second-largest importer. The political crisis deepened when Prime Minister Sheikh Hasina resigned and fled the country on August 5, prompting the Army Chief to announce the formation of an interim government.
While Bangladesh constitutes a relatively small portion of India’s total exports, its importance has been growing. Over the past decade, exports to Bangladesh have nearly doubled. Cotton and fuel are the two primary commodities driving this growth, each accounting for about 20% of India’s total exports to Bangladesh.
In FY24, India’s exports to Bangladesh totaled $11 billion, representing 2.5% of its overall exports—an increase from 1.7% in FY13.
The evolving political scenario in Bangladesh is likely to have a profound impact on India’s cotton sector, underscoring the intricate economic ties between the two nations.
