India on Wednesday terminated with effect from April 8 the trans-shipment facility extended to Bangladesh that allowed its cargo exports to third countries using Indian land customs stations en route to ports and airports. Indian exporters, mainly from the apparel sector, had earlier urged the Government to withdraw this facility to the neighbouring country.
The facility had enabled smooth trade flows for Bangladesh’s exports to countries like Bhutan, Nepal and Myanmar. The facility was provided by India to Bangladesh in June 2020.
“It has been decided to rescind... Circular...Dated June 29, 2020, as amended with immediate effect. Cargo already entered into India may be allowed to exit the Indian territory as per the procedure given in that circular,” a Central Board of Indirect Taxes and Customs statement said.
The decision comes against the backdrop of the recent comments made by Bangladesh Chief Adviser Muhammad Yunus on India’s northeastern states. Addressing a programme apparently in China, Yunus had purportedly stated that India’s seven landlocked eastern states known as ‘seven sisters’ “have no way to reach the ocean. We are the guardian of the ocean (Bay of Bengal)”.
He had also invited China to send goods across the world through Bangladesh. This statement drew sharp reactions from Indian political leaders cutting across party lines.
“The trans-shipment facility extended to Bangladesh had over a period of time resulted in significant congestion at our airports and ports,” External Affairs Ministry spokesperson Randhir Jaiswal said.
“Logistical delays and higher costs were hindering our own exports and creating backlogs,” he said.
Bangladesh has been using several Indian ports and airports for sending its exports to Middle East, Europe and many other countries.
“To clarify, these measures do not impact Bangladesh exports to Nepal or Bhutan transiting through Indian territory,” Jaiswal said at his weekly media briefing here.
Yunus and Prime Minister Narendra Modi held talks in Bangkok on the sidelines of the BIMSTEC summit on April 4.
India-Bangladesh relations nosedived dramatically after the interim government headed by Yunus failed to contain attacks on minorities, especially Hindus, in that country. The announcement comes at a time when the US has imposed sweeping tariffs on a number of countries, including India and Bangladesh.
The earlier Indian circular had allowed trans-shipment of export cargo from Bangladesh to third countries using Indian Land Customs Stations (LCSs) en route to Indian ports and airports. According to trade experts, the decision will help many of the Indian exporting sectors like apparel, footwear, and gems and jewellery. Bangladesh is a big competitor of India in the textile sector.
“Now, we will have more air capacity for our cargo. In the past, exporters have complained about lesser space due to the transhipment facility given to Bangladesh,” Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.
Apparel exporters’ body AEPC had earlier urged the government to suspend this order, which allows the trans-shipment of Bangladesh export cargo to third countries through the Delhi air cargo complex.
AEPC Chairman Sudhir Sekhri had stated that almost 20-30 loaded trucks arrive in Delhi every day, which slows down the smooth movement of cargo, and airlines are taking undue advantage of this. This leads to an excessive increase in air freight rates, delay in handling and processing of export cargo, and severe congestion at the Cargo Terminal at the IGI Airport, Delhi, resulting in exports of Indian apparel through the Delhi air cargo complex becoming uncompetitive.
“This will help in the rationalisation of freight rates resulting in less transportation cost to the Indian exporters, besides decongesting the airports leading to the shorter transit time to ship the goods,” AEPC Secretary General Mithileshwar Thakur said. Think tank Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said that the withdrawal of this facility is expected to disrupt Bangladesh’s export and import logistics, which depend on Indian infrastructure for third-country trade.
“The previous mechanism had offered a streamlined route through India, cutting transit time and cost. Now, without it, Bangladeshi exporters may face logistical delays, higher costs, and uncertainty. Additionally, Nepal and Bhutan, both landlocked nations, may raise concerns about restricted transit access to Bangladesh, especially as this move will hamper their trade with Bangladesh,” Srivastava said.
He added that Bangladesh’s plans for creating strategic base near the Chicken’s Neck area with China’s help may have prompted this action. On the other hand, India always supported Bangladesh cause. India allows one way zero tariff access to Bangladesh goods (all except alcohol and cigarettes) to vast India market since past two decades. The India-Bangladesh trade stood at USD 12.9 billion in 2023-24.