Bangladesh political turmoil & impact on Indian businesses: Explained

In a dramatic turn of events, Bangladesh's Prime Minister Sheikh Hasina resigned and fled the country as protestors stormed her residence.

Bangladesh army chief, General Waker-Uz-Zaman, announced Sheikh Hasina's resignation and said that an interim government will be formed soon.

However, this didn't stop the protests and the violence that has engulfed India's neighbour for more than a month now.

While this crisis has several geopolitical ramifications, it could potentially also affect several Indian businesses which have operations there.

Let's have a look at some of India's listed companies which have a presence in Bangladesh.

Luggage manufacturing giant VIP Industries has a plant in Bangladesh which contributes more than 30 percent of the company's capacity.

FMCG major Marico also has a strong presence across Bangladesh, which accounts for almost 11 percent of its consolidated revenue. The company has said that it is watchful of the situation.

Kolkata based FMCG major Emami currently gets six percent of its revenue from Bangladesh and it also has a plant in the country.

Many of India's major textile companies including Shahi Exports, House of Pearl Fashions, Jay Jay Mills and Gokaldas Images have significant production capacity in Bangladesh. For Tata Group's Trent, which operates brands such as Zudio, the country is a major sourcing hub.

Therefore, any production disruption in Bangladesh could have severe impact on these businesses. However, this could also work in favour of some Indian manufacturers. Bangladesh's monthly apparel exports stand at up to 3.8 billion dollars, with significant share in the UK, EU and US markets. If the supply from Bangladesh gets disrupted, some parts of these orders could come to India. Also, if the situation worsens, Indian manufacturers who have plants in Bangladesh could look to move their operations to India.

Textile manufacturing disruption in the neighboring country could also potentially hit India's cotton farmers, as Bangladesh is the top destination for India's cotton exports.