New Delhi: Crisil Ratings said on Tuesday that recent developments in Bangladesh did not have a significant impact on India's trade and it does not foresee any near-term impact on India Inc's credit quality.
Crisil Ratings said the effect will vary depending on industry/sector specific nuances and exposure. "We also do not foresee any near-term impact on India Inc's credit quality," he added.
However, a prolonged disruption may affect the income profiles and working capital cycles of some export-oriented industries for which Bangladesh is a demand or production centre.
In addition, the movement of the Bangladeshi currency, the taka, will have to be monitored, according to the credit rating agency.
"Recent developments in Bangladesh have not had a significant impact on Indian trade and going forward, the effect will vary depending on industry/sector specific nuances and exposure. We do not foresee any short-term impact on quality credit rating of India Inc. either," Crisil Ratings said.
Footwear, consumer goods and soft luggage companies could also see some impact due to manufacturing facilities located in Bangladesh. These facilities faced operational challenges during the initial phase of the crisis.
However, most have since started operating, although full momentum and the ability to maintain their supply chain will be critical, he said.
Engineering, procurement and construction companies engaged in energy and other projects in Bangladesh could face delays in execution this fiscal year as a significant part of their workforce has been recalled to India for almost a month now.
With only a gradual increase in the workforce expected, the revenue booking could be lower this fiscal year compared to earlier expectations, Crisil Ratings added.
While sectors such as cotton yarn, energy, footwear, soft luggage and fast moving consumer goods (FMCG) may see a small but manageable negative impact, ship scrapping, jute and ready-made garments ( RMG) should benefit, Crisil Ratings said.
For most others, the impact will be negligible.
India's trade with Bangladesh is relatively low, accounting for 2.5 per cent of its total exports and 0.3 per cent of its total imports in the last fiscal year, according to Crisil Ratings.
Merchandise exports mainly comprise cotton and cotton yarn, petroleum products, electric power, etc., while imports largely consist of vegetable fatty oils, marine products and clothing.
For cotton yarn producers, Bangladesh accounts for 8-10 percent of sales, so the revenue profile of major exporters could be affected. Its ability to offset sales in other geographies will be an important factor that can be monitored, Crisil Ratings added.
Nobel Prize winner Muhammad Yunus was named senior adviser to Bangladesh last month following the resignation of Sheikh Hasina, who fled the country on August 5, amid mass student-led protests.
Crisil Ratings said the effect will vary depending on industry/sector specific nuances and exposure. "We also do not foresee any near-term impact on India Inc's credit quality," he added.
However, a prolonged disruption may affect the income profiles and working capital cycles of some export-oriented industries for which Bangladesh is a demand or production centre.
In addition, the movement of the Bangladeshi currency, the taka, will have to be monitored, according to the credit rating agency.
"Recent developments in Bangladesh have not had a significant impact on Indian trade and going forward, the effect will vary depending on industry/sector specific nuances and exposure. We do not foresee any short-term impact on quality credit rating of India Inc. either," Crisil Ratings said.
Footwear, consumer goods and soft luggage companies could also see some impact due to manufacturing facilities located in Bangladesh. These facilities faced operational challenges during the initial phase of the crisis.
However, most have since started operating, although full momentum and the ability to maintain their supply chain will be critical, he said.
Engineering, procurement and construction companies engaged in energy and other projects in Bangladesh could face delays in execution this fiscal year as a significant part of their workforce has been recalled to India for almost a month now.
With only a gradual increase in the workforce expected, the revenue booking could be lower this fiscal year compared to earlier expectations, Crisil Ratings added.
While sectors such as cotton yarn, energy, footwear, soft luggage and fast moving consumer goods (FMCG) may see a small but manageable negative impact, ship scrapping, jute and ready-made garments ( RMG) should benefit, Crisil Ratings said.
For most others, the impact will be negligible.
India's trade with Bangladesh is relatively low, accounting for 2.5 per cent of its total exports and 0.3 per cent of its total imports in the last fiscal year, according to Crisil Ratings.
Merchandise exports mainly comprise cotton and cotton yarn, petroleum products, electric power, etc., while imports largely consist of vegetable fatty oils, marine products and clothing.
For cotton yarn producers, Bangladesh accounts for 8-10 percent of sales, so the revenue profile of major exporters could be affected. Its ability to offset sales in other geographies will be an important factor that can be monitored, Crisil Ratings added.
Nobel Prize winner Muhammad Yunus was named senior adviser to Bangladesh last month following the resignation of Sheikh Hasina, who fled the country on August 5, amid mass student-led protests.
