India Imposes New Trade Restrictions on Bangladeshi Imports, Allowing Entry Only Through Key Sea Ports
In a move that is likely to significantly affect trade ties between India and Bangladesh, the Indian government on Saturday announced new restrictions on the import of ready-made garments and various consumer goods from Bangladesh.
These goods will now be allowed entry only through the Kolkata and Nhava Sheva sea ports, with immediate effect, effectively barring land-route access through the northeastern states.
The restrictions were detailed in a notification issued by the Director General of Foreign Trade (DGFT) and came shortly after India ended a nearly five-year-old arrangement that allowed Bangladeshi goods to be trans-shipped to third countries via Indian ports and airports.
Scope of the New Restrictions
According to the DGFT notification, the following categories of goods will no longer be permitted through land customs stations in Meghalaya, Assam, Tripura, and Mizoram, as well as through Phulbari and Changrabandha checkpoints in West Bengal:
- Ready-made garments (RMG)
- Plastic goods
- Wooden furniture
- Carbonated beverages
- Processed food items
- Fruit-flavoured drinks
- Cotton and cotton yarn waste
These commodities, which form a major component of Bangladeshi exports to India, will now require routing through designated sea ports, significantly raising logistical and cost barriers for exporters.
Background and Diplomatic Context
This decision appears to be a retaliatory measure by New Delhi in response to trade restrictions imposed by Dhaka. Bangladesh has, in recent months, denied certain value-added goods from India’s northeastern states access through its land transit routes.
This includes the April 13 halt of Indian yarn exports through land ports and a subsequent ban, from April 15, on rice exports via the Hili and Benapole Integrated Check Posts (ICPs).
Indian officials have repeatedly flagged these issues with Bangladeshi authorities, but according to sources familiar with the developments, there has been no resolution or easing of Dhaka’s policies.
India had historically permitted Bangladeshi exports through all land and sea trade points, granting unrestricted access to its northeastern markets.
However, Bangladesh’s restrictive policies have left Indian exporters grappling with limited market access, particularly from the northeastern region.
As a result, the economic growth and industrial development of the region have reportedly suffered due to excessive transit fees and other logistical constraints imposed by Bangladesh.
Economic Impact on Bangladesh
Bangladesh, which is one of the world’s largest exporters of ready-made garments with exports worth approximately USD 38 billion in 2023, ships about USD 700 million worth of garments to India annually.
Notably, around 93% of these exports currently enter India through land ports, most of which are located in the northeastern states.
The decision to reroute all such exports through sea ports could disrupt supply chains and increase operational costs for Bangladeshi manufacturers and exporters, many of whom depend on faster and cheaper overland routes.
There are currently 11 key land transit points used for India-Bangladesh trade in the northeast—three in Assam, two in Meghalaya, and six in Tripura. All of these are now affected by the new directive.
Strategic and Political Dimensions
The worsening trade ties come against a backdrop of deteriorating diplomatic relations between the two neighbours.
Tensions have been escalating since former Prime Minister Sheikh Hasina fled Bangladesh in August last year, following widespread anti-government protests.
Hasina is believed to have taken shelter in India, while an interim government under Muhammad Yunus took over.
Relations have reportedly taken a turn for the worse under the interim administration, especially due to its failure to prevent violence against minority communities, including Hindus.
The growing unrest and policy shifts have only deepened mistrust between the two governments.
India’s Strategic Shift
Indian officials argue that Bangladesh has enjoyed unilateral trade advantages in recent years, with free access to the northeastern markets, while Indian exporters face numerous hurdles in accessing the Bangladeshi market.
In light of this perceived imbalance, the Indian government is now looking to support the ‘Atmanirbhar Bharat’ (self-reliant India) initiative by boosting local manufacturing in the northeastern states.
The port restrictions are seen as part of this broader strategy to protect and promote domestic industries.
Officials emphasized that Bangladesh’s approach has led to an unhealthy dependency and stunted the growth of small and medium enterprises in India’s northeast by limiting their export potential to just agricultural commodities.
This recent development marks a significant shift in the long-standing trade dynamics between India and Bangladesh, and further diplomatic efforts may be required to resolve the emerging economic and political tensions.
