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Dhaka : A photo taken with a drone shows people gather around at the Bangladesh Parliament House in Dhaka, Bangladesh, 05 August 2024.(Photo: PTI)
Amid escalating unrest in Bangladesh, some of India’s largest companies, including Dabur, Adani Power, Marico, Hero MotoCorp, and TVS Motor, are assessing the impact on their business interests in the country.
Despite the ongoing turmoil that saw resignation of Sheikh Hasina and her subsequent escape to India on Monday, Tata group airlines — Air India and Vistara — have made the decision to resume flights to Dhaka, even as the situation there remains precarious with the death toll in the latest spate of violence reaching at least 440.
Expressing concern, External Affairs Minister S Jaishankar, delivered suo-motu statements in both houses of Parliament on Tuesday, and articulated deep worries over the volatile situation in Bangladesh, particularly concerning the welfare of minority communities. He confirmed that the Indian government is maintaining regular contact with Bangladeshi authorities.
He also addressed an all-party meeting to discuss the rapidly evolving crisis in the neighbouring country, where President Mohammed Shahabuddin has dissolved parliament to pave the way for an interim administration. Meanwhile, Hasina’s plans to travel to London have encountered significant hurdles due to the “uncertainties” surrounding the current situation.
The unrest in Bangladesh is resonating deeply within the Indian business community. Shares of Marico fell by 6.5 per cent, closing at Rs 628 apiece as investors fretted over the impact on the company’s international business portfolio. Sources close to Marico said that the company is closely monitoring the situation.
A spokesperson for Dabur emphasised that while the company is closely monitoring the developments in Bangladesh, the country represents less than 1 per cent of Dabur’s consolidated revenue and under 0.5 per cent of its consolidated net profit.
Adani Power, which supplies 1,495 Mw of electricity from its Godda, Jharkhand plant to Bangladesh, reported that its operations remain uninterrupted. A spokesperson said: “Adani Power has a power purchase agreement with the Bangladesh Power Development Board (BPDB) to meet their power requirements. As per the schedule (provided by BPDB), Adani Power continues to supply power to the Bangladesh power utility without any disruption. Going forward, we will remain guided to the BPDB’s schedule and the provisions of the PPA between the two utilities.” The receivables for the electricity supplied are secured by a sovereign guarantee from the Bangladeshi government, as noted in the company’s annual report.
In the two-wheeler sector, Hero MotoCorp and TVS Motor have assembly plants in Bangladesh in partnership with local firms. Indian telecom major Bharti Airtel, holding a 28% stake in Robi Axiata, a local wireless telephony firm, is another key player keeping a close eye on the developments.
Exporters have voiced concerns that the ongoing political instability could exacerbate the situation and further impact engineering exports to Bangladesh. Arun Kumar Garodia, chairman of Engineering Export Promotion Council India, remarked: “The political developments in Bangladesh are a significant concern for Indian engineering exporters. As one of the top destinations for Indian engineering products and our largest trading partner in South Asia, stability in Bangladesh is crucial for maintaining and expanding trade relations.”
The total value of engineering goods exported to Bangladesh in the June 2024 quarter was $542.1 million, marking an 8.2 per cent decline from $590.4 million in the same period last year. Bangladesh has recently witnessed a notable reduction in imports of industrial raw materials and capital machinery. The decreased demand for consumer goods has negatively impacted factory production levels and exacerbated supply chain disruptions, adding complexity to an already challenging economic landscape.
S&P Global Rating, however, is unperturbed by the prospects of the Bangladesh crisis hurting India’s exports. “India is a well-diversified exporter to the entire world and its trade profile is significantly larger than bilateral trade relationships with economies like Bangladesh… Whatever the impact is going to be on directly is really quite unlikely to have a meaningful impact on its overall trade position for the fiscal year… its external position is quite strong in the country and is a net creditor to the world by our calculation,” said Andrew Wood, director, sovereign and international public finance ratings (Asia-Pacific), S&P Global Ratings.
(Inputs from Dev Chatterjee, Sharleen D’Souza, and Amritha Pillai)
First Published: Aug 06 2024 | 7:42 PM IST
