India-Bangladesh trade down in pre-election season

Kolkata: The India-Bangladesh bilateral trade, already strained by economic headwinds during the year, has dampened in some land ports due to the upcoming general elections in the neighbouring country, exporters said on Tuesday. Bangladesh is set to hold its 12th general election on January 7 and the pre-election atmosphere has cast a shadow on the cross-border trade.

Indian exports to Bangladesh between April and October 2023 declined by 13.32 per cent, while imports saw a marginally smaller 2.3 per cent dip, according to data from the Department of Commerce. “Trade activity has been affected for some time now due to Bangladesh’s forex shortages and liquidity crunch. The election-related slowdown is expected to be temporary, but stricter rules like the 110 per cent margin on letters of credit compared to the earlier 10 per cent have been a major concern for traders,” a commodity exporter said on condition of anonymity.

Stakeholders point to the general slowdown in trade activity during elections as a natural phenomenon due to factors like tighter border controls, heightened risk aversion among businesses, and the potential for disruptions like protests and shortage of labourers who go back to their hometowns for voting. The impact is particularly acute in West Bengal’s border town of Bangaon near the Petrapol border, where local markets heavily rely on Bangladeshi tourists, they said.

“Export activity, especially of construction materials like stone chips, has slowed down due to the elections,” said Prasonjit Ghosh of Malda’s Malhadipur Exporters’ Association.

Fly ash exports via the Indo-Bangladesh protocol route through Kolkata port have also witnessed a 15-25 per cent drop during the peak construction season, highlighting the broader impact on construction material trade. “There’s been a temporary slowdown due to the election mode, but we expect trade to bounce back to normal after the polls,” said Sajedur Rahman of the Benapole C&F Agents Association.