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Published : 10 Apr 2025, 03:03 AM
India has withdrawn the facility allowing Bangladesh to use its ports and airports for exporting goods to third countries, prompting exporters in Dhaka to reassess shipment strategies and consider alternative routes.
The sudden move, confirmed on Wednesday afternoon, blocks one of the key transit options for urgent exports to the Middle East and Western markets.
While the immediate effect on overall export volumes may be limited, exporters say the restriction reduces flexibility in delivery options and could shrink Bangladesh’s export capacity.
“This calls for diplomatic intervention from our government,” said one exporter, reacting to India’s decision.
Government, business, and political circles in Dhaka are now speculating on the possible reasons behind the move by the neighbouring country, which had earlier facilitated such transshipment as part of deepening regional cooperation.
Economists and diplomats fear that this form of trade disruption could undermine the decades-long effort to broaden bilateral ties between Bangladesh and India.
In response, Commerce Advisor Sheikh Bashir Uddin has begun consultations with senior members of the interim government to determine the next course of action.
A senior official from the export wing of the commerce ministry, speaking on condition of anonymity, said the trade advisor had already initiated discussions with key stakeholders.
Efforts to contact the trade advisor via phone and email on Wednesday went unanswered.
India’s Central Board of Indirect Taxes and Customs (CBIC) issued a notification cancelling the facility that allowed Bangladesh to use Indian land, air, and sea routes for transshipping export goods to countries like Bhutan, Nepal, and Myanmar.
However, on Wednesday evening, India’s Ministry of External Affairs clarified the policy by saying that the withdrawal of transshipment benefits would not apply to goods destined for Nepal and Bhutan.
This means Bangladesh can no longer use Indian ports or airports to export goods to third countries outside of those two landlocked neighbours.
Initial reports in Indian media triggered widespread concern, prompting extensive coverage across Bangladeshi and Indian outlets.
The Indian foreign ministry’s evening statement aimed to settle the confusion.
“The transshipment benefit extended to Bangladesh was causing significant congestion at our airports and seaports,” said the Indian statement.
“This led to delays, higher costs, and backlogs in our own export system. Therefore, the facility has been withdrawn effective from Apr 8, 2025.”
The ministry added, “To be clear, this decision does not affect goods moving from Bangladesh to Nepal or Bhutan via Indian territory.”
WHAT THE NOTIFICATION SAYS
In a notification issued on Tuesday, India’s Central Board of Indirect Taxes and Customs (CBIC) announced the cancellation of the transshipment facility for Bangladeshi goods.
The new notification immediately rescinds an earlier one dated Jun 29, 2020.
The now-revoked notification had permitted the transshipment of export goods from Bangladesh—via containers or covered vans—from India’s land customs stations to other ports or airports within India for shipment to third countries.
The new notification specifies that Bangladeshi goods currently in transit can leave India under the existing procedures.
No new consignments, however, will be eligible for the transshipment facility moving forward.
As a result of India’s decision, the export of Bangladeshi garments to third countries through Indian gateways—such as Indira Gandhi International Airport in Delhi—will be disrupted.
The Apparel Export Promotion Council of India had reportedly been lobbying for the cancellation of this facility, citing direct competition between India and Bangladesh in the ready-made garments sector.
IMPACT ON EXPORTS
During the 2020 COVID-19 pandemic, when cargo pressure increased at Dhaka airport, apparel industry entrepreneurs used Kolkata airport to ship products to buyer countries.
Reflecting on that experience, former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Faruque Hassan told bdnews24.com: "Kolkata airport has a higher cargo handling capacity, and it offers direct flights to almost all western routes.
“It made shipping products easier for us. Bangladeshi exporters mainly use Indian ports in emergencies."
He added, "With the cancellation of this facility, the pathways for Bangladesh's exports are now more limited. Our capacity has been somewhat reduced."
When delays occur in production, buyers often request shipments via air.
To retain customers, apparel sector exporters must comply with such requests.
Cargo shipping costs are lower in India than in Dhaka.
Shipping products from Kolkata airport to the western world costs between $2 to $2.50 per kg.
While in Bangladesh, it costs $5 to $6, according to Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
"In India, the Civil Aviation Authority sets the cargo charges, which means transport planes cannot arbitrarily increase prices," he said.
In contrast, in Bangladesh, airlines themselves set the rates and may increase charges when demand rises.
BKMEA president suggested that the government could regulate these rates.
Regarding alternative routes, he said: "Our export options have certainly reduced. Garment exports, however, won’t be affected.
“Shipments will now go by sea to Colombo, Maldives, Dubai, or Pakistan and then be flown to their destinations.
“We’ll lose the time advantage we had when shipping through India."
Shams Mahmud, former president of the Dhaka Chamber of Commerce and Industry (DCCI) and managing director of Shasha Garments Limited, said: "We had one option, but now it's gone.
“We need to look at the other aspects rather than just the financial implications. They [India] are trying to become competitive with us in ready-made garments.
“It may take some time to understand the extent of the impact and how buyers will react."
"Kolkata or Delhi airports are not always used, only when necessary,” he added. “It would have been better to have that option.
“I think diplomatic initiatives from the government are required."
OBSTACLE TO BUILDING MULTIDIMENSIONAL TIES
Economists and diplomats believe that India’s decision will disrupt the long-standing efforts to build a multidimensional relationship between the two countries, particularly in the area of trade cooperation.
Commenting on the move, Amena Mohsin, former professor of the Department of International Relations at Dhaka University, told bdnews24.com that India's decision was “not right” and counterproductive to its own interests.
“If you look at it particularly in light of the BIMSTEC summit, where regional connectivity was a key theme, this development contradicts that vision.
“India stood to gain the most from enhanced connectivity,” she said.
She added, “All these ideas — regional cooperation, connectivity — were originally floated by India. Now it seems India is stepping back from its own good neighbourly policy. That’s what we’re observing.”
The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) includes Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.
Leaders from these countries met recently in Bangkok under the theme of a “Prosperous, Resilient and Open BIMSTEC” to discuss vital regional issues.
Meanwhile, the global trade landscape has been further strained by retaliatory tariffs imposed by several countries in response to United States President Donald Trump’s steep tariff hike.
These new tariffs — which took effect on Wednesday — include a 104 percent duty on Chinese goods.
Bangladesh now faces a 37 percent supplementary tariff on its exports to the US, up from an average of 15 percent, taking the total to around 52 percent.
India, too, has been hit with a 26 percent counter-tariff.
Other neighbouring countries have also been affected.
In this context, Prof Amena emphasised that regional countries should have been strengthening trade ties to mitigate the global pressure.
She said: “At this moment, when the entire world is under the strain of US tariffs, it was expected that regional countries would build connectivity and increase trade among themselves.
“Instead, India has made a decision that could undermine goodwill — even for itself.”
She warned that the decision may cast a long-term negative impact on bilateral diplomatic ties.
SEVEN SISTERS CONTROVERSY
With no specific reason provided in India's notification for the sudden cancellation of the transshipment facility, speculations have begun to arise.
Indian media outlets have drawn connections between the decision and recent tensions between Dhaka and Delhi, particularly in the aftermath of a controversial remark made by Chief Advisor Muhammad Yunus during his visit to China.
The uproar stems from the interim prime minister’s comments before Chinese business leaders in Beijing on Mar 28, where he described India’s northeastern region, often referred to as the Seven Sisters, as “landlocked areas” that rely on Bangladesh for access to the sea.
“We are the sole guardian of the sea for this region,” Yunus said.
“As a result, it opens up a huge potential,” he added. “It can be an economic extension of China.
“Build, produce, market different things; bring things to China or send them all over the world.”
According to The Indian Express, Yunus’s remarks were seen as an attempt to highlight Yunus's remarks were seen as an attempt to highlight Bangladesh's "strategically advantageous position" in relation to the Seven Sisters states.
At a time when New Delhi's relationship with Dhaka is fragile, portraying China as a "new strategic partner" has further complicated India-Bangladesh relations.
Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), told The Indian Express that India had continuously supported Bangladesh’s interests and provided one-way, zero-tariff access to Bangladeshi goods, with the exception of alcohol and cigarettes, to the vast Indian market for the past two decades.
He added, “Bangladesh’s plans to establish a strategic base near the Chicken’s Neck area with China’s assistance may have prompted this action.
“Bangladesh has invited Chinese investment to revitalise the airbase at Lalmonirhat, near India’s Siliguri Corridor.”
Later, at the Indian Ministry of External Affairs (MEA) briefing, journalists inquired whether India had taken this decision because of Yunus’s Beijing comments.
One journalist said although relations were thought to be moving in a “positive” direction after a meeting between Narendra Modi and Yunus on the sidelines of the BIMSTEC summit in Thailand, it now seemed to be going in the “opposite direction”.
In response, MEA spokesperson Randhir Jaiswal said: "The reason for the withdrawal of the transshipment facility has already been said.
“It has been withdrawn because of the build-up of Indian goods and the slow pace. For this reason, this specific facility granted in 2020 has been withdrawn."
Following up, another journalist referenced the issue of blocking goods bound for Nepal and Bhutan, suggesting that when India’s trade is under pressure from major partners such as the US, it would have made more sense to strengthen regional commerce with countries like Bangladesh and Nepal, rather than restricting it.
Jaiswal said: “I will repeat—Bangladesh’s exports to Nepal and Bhutan will not be impacted by this measure.
“This step has been taken to address domestic congestion. We required additional space for our own exports.”
The cancellation has sparked reactions in Bangladesh as well.
During a break at the ongoing investment summit, journalists raised the matter with Bangladesh Investment Development Authority (BIDA) Executive Chairman Chowdhury Ashik Mahmud bin Harun.
The BIDA chief said: “Over the past week, our relations with India have been re-establishing. In the world of trade, many decisions are made swiftly, and I believe many of them can also be overturned.
“As I do not have full details on the matter, I cannot offer a detailed comment.”
Prof Amena believes India’s move is likely a response to Yunus’s Seven Sisters remarks.
“That appears to be the immediate impression—it's about what was said regarding the Seven Sisters,” she said.
Despite the tension, the analyst expressed hope that both countries will seek a diplomatic solution through dialogue.
[Writing in English by Arshi Fatiha Quazi and Sheikh Fariha Bristy]
