India has restricted Bangladeshi garment and consumer goods imports to two seaports, escalating trade tensions amid worsening diplomatic ties.
In a move likely to deepen the ongoing diplomatic rift, India on Saturday imposed fresh restrictions on Bangladeshi consumer goods, limiting their entry only through two designated seaports — Kolkata and Nhava Sheva. The decision effectively blocks the entry of Bangladeshi readymade garments (RMG) and several other items through the northeastern land transit points, significantly impacting trade flows between the two neighbours.
The new restrictions, issued through a notification by the Directorate General of Foreign Trade (DGFT), bar imports of not just RMG but also plastics, wooden furniture, carbonated beverages, processed food items, fruit-flavoured drinks, cotton, and cotton yarn waste through the land customs stations (LCS) and integrated check posts (ICPs) in Assam, Meghalaya, Tripura, and Mizoram, as well as Phulbari and Changrabandha in West Bengal.
The move comes barely five weeks after India ended a nearly five-year-old trans-shipment arrangement that had allowed Bangladeshi export cargo to move to third countries via Indian ports and airports — a step that had once symbolized deepening economic cooperation between the two South Asian neighbours.
Tit-for-tat policy amid rising tensions
Government officials familiar with the development said the decision was driven by longstanding trade asymmetries and Bangladesh’s refusal to ease restrictions on Indian exports, particularly from the northeastern region. Indian authorities have accused Dhaka of denying entry to value-added goods from the Northeast and enforcing discriminatory port and transit charges that have hampered industrial growth in the region.
“There are 11 land transit points between India and Bangladesh in the Northeast. Despite India allowing Bangladeshi goods free access through these points for years, Bangladesh has consistently limited access for Indian products, especially yarn, processed goods, and rice,” an official said, requesting anonymity.
Bangladesh recently stopped yarn imports from India through land routes as of April 13 and further restricted rice imports through Hili and Benapole from April 15. Additionally, Indian exports reportedly face rigorous inspections at Bangladeshi ports.
Officials also cited “unreasonably high” and “economically unviable” transit charges imposed by Bangladesh as one of the key reasons behind India’s decision.
Economic impact
The new restrictions are expected to hit Bangladesh’s lucrative RMG sector, which is valued globally at over $38 billion. India accounts for a relatively small but significant share of this market, with around $700 million worth of annual imports — 93% of which had previously entered through northeastern land routes.
By forcing all RMG shipments to now pass through only two seaports, India’s move is expected to increase transit time and costs for Bangladeshi exporters, potentially rendering their goods less competitive in the Indian market.
In contrast, Indian exporters in the Northeast have long complained of limited access to the Bangladeshi market, resulting in a heavy reliance on agriculture exports while restricting industrial growth in the region. The latest policy shift is being viewed as a corrective measure aimed at levelling the playing field and supporting the central government’s ‘Atmanirbhar Bharat’ (self-reliant India) initiative.
Political backdrop
This shift in trade policy follows a sharp deterioration in India-Bangladesh relations after the ousting of Bangladeshi Prime Minister Sheikh Hasina in August 2024. Hasina fled to India amidst massive protests against her government. The interim administration in Dhaka, led by Muhammad Yunus, has since struggled to contain political unrest and rising communal tensions, including attacks on minority communities.
The political instability has further strained bilateral ties, with both sides accusing each other of unfair trade practices and diplomatic provocation.
As tensions escalate, the future of India-Bangladesh economic cooperation remains uncertain — a sharp contrast to the optimism that prevailed just a few years ago.
