China closeness impact: India bans land port entry for several Bangladesh goods as trade friction deepens

In a sudden recalibration of trade norms, India on May 17 imposed sweeping port restrictions on a range of imports from Bangladesh, including readymade garments and processed food. The move, notified by the Directorate General of Foreign Trade (DGFT), comes just weeks after New Delhi revoked a key transshipment facility for Dhaka — a decision that coincided with diplomatic strains triggered by provocative remarks from a top Bangladeshi official in China.

 The move appears to have come in response to similar curbs placed by Dhaka on certain Indian products last month. 

The DGFT notification clearly outlines that imports of readymade garments from Bangladesh will now be restricted to only two ports — Nhava Sheva and Kolkata seaports — barring all land port entries.

The directive further lists categories such as fruits, fruit-flavoured and carbonated drinks, processed foods including snacks, chips and confectionery, as well as cotton waste, plastic goods, dyes, and wooden furniture. For these, inbound shipments from Bangladesh are barred from entering through any Land Customs Stations (LCSs) or Integrated Check Posts (ICPs) located in Assam, Meghalaya, Tripura, Mizoram, and specifically Changrabandha and Fulbari in West Bengal.

Exemptions have been made for fish, LPG, edible oils, and crushed stone, which can continue to enter through these ports. The changes have been codified into India’s import policy with immediate effect.

This follows the April 9 withdrawal of India’s transshipment facility granted in 2020, which had allowed Bangladesh to route exports to the Middle East and Europe through Indian ports and even the Delhi airport. That facility, now revoked for all destinations except Nepal and Bhutan, had significantly eased Bangladesh’s trade logistics.

Relations between the two nations have nosedived in the wake of controversial comments made by Muhammad Yunus, the head of Bangladesh’s interim government, who during a visit to China claimed that India’s northeastern states are landlocked and depend on Bangladesh for ocean access. He also described Bangladesh as the “only guardian” of the Indian Ocean in the region and extended an invitation to China to utilize its trade routes.

His remarks triggered sharp backlash from Indian leaders across the political spectrum and added further strain to bilateral ties, already fraying due to Dhaka’s failure to check violence against minorities, particularly Hindus.

Trade tensions have also been fueled by economic rivalry. Bangladesh, a major player in the global textile sector, exported $38 billion worth of readymade garments in 2023, including $700 million to India — 93% of which came through land ports. Indian exporters, especially in the apparel sector, have long pushed for curbs on such imports.

Adding to the friction, Bangladesh halted yarn imports from India through land ports from April 13 and has continued to restrict Indian exports at its own LCSs and ICPs in the northeast, despite repeated requests from New Delhi to ease those curbs.

 Bangladesh is a big competitor of India in the textile sector. The India-Bangladesh trade stood at $12.9 billion in 2023-24. India had previously permitted Bangladesh exports via all LCSs and ICP and seaports without undue restrictions. However, Dhaka imposed port curbs on Indian exports, particularly at LCSs and ICPs bordering northeast states.

On April 13 this year, yarn exports from India across landports were stopped and Indian shipments were subjected to rigorous inspections on entry. "Further rice exports from India were not allowed through Benapole ICPs from April 15, adding to existing restrictions," an official said adding industrial growth in the northeastern states suffers a triple jeopardy due to the imposition of unreasonably high and economically unviable transit charges by Bangladesh.

Similarly, due to landport curbs by Bangladesh, the northeastern states suffer from a lack of access to the Bangladesh market to sell locally manufactured goods, restricting the market access to primary agri goods only. The neighbouring country, on the other hand, has free access to the entire northeast market. 

(With inputs from PTI)