India ends transshipment facility for Bangladesh cargo
The declaration was made at a moment when the United States has increased tariffs on a broad range of countries, a move that is widely anticipated to negatively impact the economy of Bangladesh. This timing is significant, as the new US trade policies are already causing disruptions in global markets, particularly for developing nations. With Bangladesh being heavily reliant on exports, especially in sectors like garments, any rise in tariffs from major trading partners such as the US could have serious consequences. Experts suggest that the economic ripple effects might slow down Bangladesh’s growth, reduce foreign revenue, and create uncertainty in its key export industries.
India Ends Transshipment Facility for Bangladesh Amid Rising Tensions
New Delhi: India has officially revoked the special transshipment facility previously granted to Bangladesh, which allowed the neighboring country to transport its export cargo through Indian territory to reach global markets.
That directive had enabled Bangladesh to use Indian Land Customs Stations and onward routes via Indian ports and airports to export goods to third countries like Nepal, Bhutan, and Myanmar. The latest circular makes it clear that the withdrawal takes effect immediately. However, cargo that has already entered Indian soil will still be permitted to complete its journey, following the guidelines outlined in the 2020 policy.
It allowed Bangladeshi exporters to move their goods overland through India, then ship them via seaports or air routes to their final destinations in other countries.
But recently, concerns had been raised by Indian businesses, especially those involved in the textile industry, who claimed the facility was putting them at a disadvantage. India’s apparel exporters had pressed the government to revoke the arrangement, citing Bangladesh’s lower labor costs that allow it to compete more aggressively in global markets. There were also accusations that the facility was being misused in ways that could potentially harm Indian exports.
Ajay Sahai, the Director General of the Federation of Indian Export Organisations (FIEO), noted that Indian exporters had expressed frustration over reduced space for their own consignments at major airports. This was attributed to the growing volume of goods from Bangladesh being transshipped via India, which was reportedly squeezing out domestic exporters.
This policy reversal comes at a sensitive moment for Bangladesh, as the United States has recently imposed increased tariffs on a broad range of countries, including Bangladesh. These tariff hikes are expected to impact the South Asian country’s economy adversely, making access to alternate trade routes even more critical for Dhaka. The Indian move, therefore, adds another layer of challenge for Bangladesh at a time of mounting external pressures.
Additionally, the decision appears to be influenced by recent diplomatic friction between the two countries. Tensions have escalated following controversial remarks made by Professor Muhammad Yunus, who currently serves as the Chief Adviser to Bangladesh’s interim government.
Yunus’s comments have been interpreted in Indian strategic circles as a provocation and a signal of Dhaka’s shifting diplomatic posture. Over the past few months, Yunus has reoriented Bangladesh’s foreign policy to bring it closer to Beijing. He now sees China as a key strategic ally, a move that has further widened the rift between India and Bangladesh.
New Delhi is increasingly wary of Dhaka’s growing tilt towards China, especially in light of rising regional tensions and economic competition. The realignment has raised concerns about security and influence, particularly in India’s eastern frontier where connectivity and access remain sensitive issues.
India has repeatedly voiced concern over the treatment of minority communities in Bangladesh, but Dhaka’s responses have been viewed as inadequate or evasive. This unresolved issue remains a sticking point in diplomatic dialogues between the two neighbors.
India’s revocation of the transshipment arrangement is being seen not just as a trade-related measure but also as a reflection of broader geopolitical discontent. Experts suggest it signals India’s readiness to take a firmer stance in the face of what it perceives as hostile shifts in Dhaka’s policy orientation.
While Bangladesh may seek alternate trade routes—possibly increasing reliance on China or investing in other regional partnerships—the removal of India’s logistical support is a significant setback. The decision underscores how economic decisions are increasingly intertwined with political and strategic calculations in South Asia.
As the situation evolves, it remains to be seen whether there will be any backchannel efforts to restore cooperation or if both countries will continue down a path of increasing divergence. For now, the end of the transshipment facility marks a notable downturn in India-Bangladesh ties—both commercially and diplomatically.