India has terminated the transshipment facility that previously allowed Bangladesh to transport export cargo to other countries through its land borders, dealing a fresh blow to Dhaka, which is already grappling with the recent U.S. tariff hike on its goods.
In an announcement on April 8, India's Ministry of Finance said it is rescinding access to the transshipment of export cargo from Bangladesh to third countries through land customs stations (LCSs) to Indian ports and airports in containers or closed-bodied trucks.
Introduced in June 2020, the facility enabled smooth trade flows for Bangladesh's exports to its neighbouring countries like Bhutan, Nepal, and Myanmar. The arrangement streamlined logistics and improved access to international markets.
"It has been decided to rescind the aforesaid Circular No. 29/2020-Customs dated 29.06.2020, as amended with immediate effect," India's customs department said in the circular.
"Cargo already entered into India may be allowed to exit the Indian territory as per procedure given in the Circular No. 29/2020-Customs," it added.
The termination of the nearly five-year arrangement is expected to impact Bangladesh's trade routes and logistics, particularly the country's ready-made garment exports, and increase trade costs with neighboring countries.
For exporters relying on Indian infrastructure for access to regional markets, the move poses a new set of hurdles in maintaining trade efficiency and reaching international destinations.
The timing also comes at a time when the U.S. has just recently imposed sweeping reciprocal tariffs targeting nearly 60 countries, including the two South Asian countries. The U.S. hit India with a 26% tariff and 37% for Bangladesh.
The notice on the termination of the transshipment facility did not provide an explanation, but various reports suggest logistical delays, higher costs, and congestion at Indian ports as reasons for the withdrawal.
Meanwhile, others suggest that India's decision may be a response to comments made by Bangladesh Chief Adviser Muhammad Yunus during his recent visit to China.
Yunus reportedly stated that India's northeastern states, known as the "seven sisters," are landlocked and lack direct access to the ocean. He described Bangladesh as the "guardian of the ocean" and invited China to utilize the Bay of Bengal for global trade.
