With the reliability of letters of credit being honoured by Bangladeshi banks coming down, Indian exporters are afraid that payments against their shipments might be delayed or not be made, resulting in a significant drop in export to neighbouring Bangladesh.

“Export out of India to Bangladesh has hit badly because the payment assurances have come down to a very low level. The exporters are not very sure about the reliability of the letters of credit being honoured by Bangladeshi banks on time,” Yogesh Gupta, Regional Chairman, Federation of Indian Export Organisations (FIEO), told businessline.

“If payments in trade don’t come, the Reserve Bank of India (RBI) takes a very stern view and FEMA provisions come into effect. So, Indian exporters are not willing to make the shipments. A general fear is there that payments will not come on time,” Gupta said.

• Also read: Indian Government secures ₹3,044.54 crore loan from KfW Germany for Bangalore Metro Phase 2

Current political upheaval in Bangladesh has exacerbated the nation’s banking sector’s frailties. Global rating agency Moody’s in November revised its ratings for six Bangladeshi banks, citing concerns over the country’s recent sovereign downgrade. The ratings agency downgraded Bangladesh’s sovereign rating on the back of heightened political risks and lower growth prospects for the South Asian nation.

The rating cut has highlighted the economic challenges that the Muhammad Yunus-led interim government in Bangladesh is facing.

As India-Bangladesh relations have hit a new low with tensions rising, border trade between the two countries may witness a massive drop within a month.

“Border trade through the Petrapole–Benapole route is still going on. But, it is likely to come down. There are lesser numbers of letters of credits being issued to the traders by both Indian and Bangladeshi banks. Despite orders, Indian exporters are not willing to make shipments to Bangladesh as they fear not getting payments,” Petrapole Clearing Agents’ Staff Welfare Association secretary Kartik Chakraborty said.

“If the tension does not abate soon, border trade will be impacted heavily within one month,” Chakraborty added.

The Land Port Petrapole is the largest land port in South Asia and it is a vital gateway for trade and commerce between India and Bangladesh. Petrapole (India)-Benapole (Bangladesh) is one of the most important land border crossings for two nations both in terms of trade and passenger movements. Nearly 70 percent of land-based trade (by value) between India and Bangladesh takes place through this land port.

Petrapole Land Port, about 80 kms from Kolkata, is also the eighth largest international immigration port of India.

As relations between the two neighbours have become strained, Kolkata’s private hospitals have been witnessing a considerable drop in Bangladeshi patients inflow.

“There has been a decline in general medical visas issued to patients from Bangladesh in the last few months. People from Bangladesh would sometimes also come on tourist visas and go for consultations or routine check-ups, but the issuance of tourist visas has also dropped in the wake of the current situation,” Pratim Sengupta, MD & CEO, Nephro Care India, told businessline. Kolkata-based Nephro Care is one of the leading multi-speciality healthcare providers in eastern India.

According to various estimates, as many as 4.49 lakh patients from Bangladesh came to India in 2023, and a significant majority of those usually come to West Bengal for treatment.

• Also read: RBI to cut policy rate by 50-75 bps in 2025: CareEdge Ratings

“At Nephro Care, nearly 10-12 per cent of our total number of patients are from Bangladesh who come for renal consultations as well as transplant. While the arrival of patients from Bangladesh has seen some drop but we have witnessed a 40-50 per cent jump in online consultations by patients in Bangladesh,” Sengupta said, adding some patients from Bangladesh are also taking visas to countries like Vietnam and then coming to West Bengal from there for treatment and renal transplants.

According to Sudipto Mitra, CEO, Peerless Hospital, the reduction in Bangladeshi patients inflow in West Bengal is mainly due to the recent communication disruptions between the two countries. “We do not see it as a business loss. We consider it a deferred business, because the patients from Bangladesh will eventually come. We are also not worried, as of our total business volume, contribution of Bangladesh is very low,” Mitra added.