India Revokes Transshipment Facility for Bangladesh Exports

April 11, 2025

Recently, India officially revoked the transshipment facility that allowed Bangladeshi exporters to transport goods through Indian territory to third countries. This decision has implications for trade logistics and costs, particularly affecting Bangladesh’s exports to Western markets. The move follows rising tensions between India and Bangladesh, exacerbated by recent statements from Bangladeshi officials regarding China’s economic involvement in Northeast India.

Background

The transshipment facility was established in June 2020. It allowed Bangladeshi goods to transit through Indian Land Customs Stations (LCSs) to reach ports and airports. This arrangement aimed to enhance trade cooperation and regional connectivity. It provided Bangladeshi exporters access to global markets, utilising India’s logistical infrastructure.

Reasons for Revocation

India cited logistical challenges as the main reason for terminating the agreement. The Ministry of External Affairs reported congestion at Indian airports and ports. This congestion led to delays and increased costs for Indian exporters. The situation created backlogs, hindering India’s own export processes. The revocation took effect on April 8, 2025.

Impact on Bangladesh’s Trade

The termination of the transshipment facility is expected to disrupt Bangladesh’s trade logistics. Exporters may face higher transportation costs and logistical delays. This is particularly concerning for exports destined for European and West Asian markets. The decision may also lead to a reevaluation of trade routes and partnerships for Bangladeshi exporters.

Bilateral Relations Between India and Bangladesh

Relations between India and Bangladesh have been strained since the ousting of former Prime Minister Sheikh Hasina’s government in August 2024. The interim government led by Chief Adviser Muhammad Yunus has faced criticism from India regarding the treatment of minorities in Bangladesh. Yunus’s comments about Bangladesh being the “guardian of the ocean” for Northeast India have further complicated diplomatic relations.

Strategic Implications of Yunus’s Remarks

Yunus’s advocacy for increased Chinese economic involvement in Northeast India has raised concerns in New Delhi. His remarks suggest a potential shift in Bangladesh’s strategic alliances. This situation puts stress on the geopolitical significance of the region and the delicate balance of power between India and Bangladesh.

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