Bangladesh Turmoil Impacts India's Economy

The political crisis in Bangladesh, which has taken a violent turn, throwing normal life out of gear, has impacted Indian companies operating in the country. FMCG company Marico’s manufacturing operations in Bangladesh remain shut even though it claims that most of its retail sales force and distributors have now resumed operations. Marico, which gets 44% of its international business and 12% of its consolidated revenues from the country, runs three factories in Bangladesh’s Gazipur and Chattogram regions.

"The operating conditions in the market are gradually improving. However, we remain watchful of the evolving situation….we expect our manufacturing operations to resume soon while we continue to maintain an adequate assurance of supply of our products to meet market demand in the interim,” Marico said in a stock exchange filing on Wednesday, adding that the medium term prospects of its business in Bangladesh remain intact. The company sells various products, including shampoos, edible oil, baby care and skin care products.

VIP Industries, which sources soft luggage, backpacks and duffle bags from Bangladesh, said that if the situation in the country continues to remain tense. The political crisis has negative ramifications for India in the long term; it will devise a new sourcing strategy, possibly moving it to India, which accounts for 70% of the company’s total sourcing.

“With the demand for soft luggage coming down, we have already been scaling down our operations in Bangladesh,” MD Neetu Kashiramka told TOI. VIP Industries said all its seven plants in the country’s Mongla region are currently working; it, however, moved its 20 Indian staff to Kolkata on Aug 4. Of the company’s revenues, 20-25% depend on sourcing from Bangladesh.