India's curbs on imports to cost Bangladesh $770 million, impacting 42% of bilateral imports: GTRI

India's reciprocatory move on banning several imports from Bangladesh will hit the neighbouring country with a $770 million bill amounting to nearly 42% of bilateral imports, as per an analysis by GTRI.

According to the Global Trade Research Initiative (GTRI), India's latest trade restrictions are far from arbitrary. "The restrictions look like India's response to Dhaka restricting imports from India on a large number of items and diplomatic pivot towards China," the GTRI noted in its analysis.

The order, released by the Union Ministry of Commerce and Industry on May 17, marks a decisive shift in trade policy, with clear geopolitical undertones. Readymade garments, processed food, and plastic products are among the major categories affected, now restricted to select sea ports or banned from land entry altogether.

Garments alone, valued at $618 million annually, can now only pass through the Kolkata and Nhava Sheva seaports, effectively cutting off Bangladesh’s access to critical land trade corridors. The directive follows recommendations from the Directorate General of Foreign Trade (DGFT) and signals a calculated response to recent diplomatic and trade moves by Dhaka.

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

Since late 2024, Bangladesh has escalated trade curbs on Indian goods. In April 2025, it banned Indian yarn imports via five key land ports, while also tightening controls on rice exports and barring dozens of other Indian products — including tobacco, fish, and powdered milk. These measures were compounded by Dhaka’s imposition of a transit fee of 1.8 taka per tonne per kilometre on Indian cargo, further straining logistics and raising costs.

The cumulative effect of these actions has disrupted Indian exports, prompting calls within India for a more assertive trade policy. Delays at Bangladeshi ports and heightened inspections have only deepened the frustrations of Indian exporters.

India's response escalated on May 17 with the DGFT formally notifying the new port restrictions, coming shortly after New Delhi revoked a key transshipment facility for Bangladesh. The facility, granted in 2020, had enabled Dhaka to route exports to Europe and the Middle East via Indian infrastructure, including the Delhi airport. That privilege was withdrawn on April 9 for all destinations except Nepal and Bhutan, reversing a significant logistical advantage for Bangladesh.

Tensions between the two countries have intensified amid comments from Muhammad Yunus, Bangladesh’s interim head of government, during a visit to China. Yunus claimed India’s northeastern states were landlocked and reliant on Bangladesh for sea access, and described Bangladesh as the “only guardian” of the Indian Ocean in the region. He also extended an offer to China to use Bangladeshi trade routes — remarks widely seen in India as provocative.