India-Bangladesh Trade Down In Pre-Election Season

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 Jan. 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%, while imports saw a marginally smaller 2.3% 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 told PTI 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% 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.

Although Petrapole cargo truck movement data shows no major trade disruptions, the number of trucks moving between Dec. 21 and 31 had been quite erratic due to holidays. However, passenger movement, particularly inbound traffic, had reduced significantly.

The inflow to India through Petrapole reduced to 2141 passengers on Dec. 31 from 2894 on Dec. 21, Petrapole Land Port Manager Kamlesh Saini said.

Binay Sinha, secretary of the Bangoan Chamber of Commerce, pinpointed the stark impact of the Bangladeshi elections on Bangoan's three local markets: Taw Market, Motilal Market, and New Market.

"Visa issuance restrictions imposed by Bangladesh except for medical treatment on its citizens during the election period drastically reduced tourist flow," Sinha elaborated.

"These markets heavily rely on Bangladeshi tourists who purchase goods in India before returning home but these local markets are not closed,” he said.

Adding to the woes, "informal trade channels have also come to a standstill during the elections, further squeezing these markets", a local trader said.