India Slams the Door on Bangladesh’s Trade Shortcut! A Game-Changer for Indian Apparel

In a bold move shaking up regional trade dynamics, India has abruptly terminated a key trans-shipment facility that allowed Bangladesh to funnel its export cargo to third countries via Indian land customs stations, ports, and airports.

The decision, effective immediately as per a Central Board of Indirect Taxes and Customs circular dated April 8, ends a privilege granted to Bangladesh in June 2020, signaling a shift in India’s trade strategy amid rising domestic pressures and global tariff wars.

The now-defunct facility had been a lifeline for Bangladesh, streamlining its exports to nations like Bhutan, Nepal, and Myanmar by leveraging India’s infrastructure. However, Indian exporters—particularly in the fiercely competitive apparel sector—had long lobbied against it, arguing it clogged air cargo space and drove up freight costs. “This is a win for us,” said Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO). “More air capacity for Indian cargo means faster, cheaper exports—especially in textiles, footwear, and gems.”

The timing couldn’t be more charged. With the US recently slapping hefty tariffs on both India and Bangladesh, the rivalry between these South Asian neighbors in the global textile market has intensified. Bangladesh, a textile powerhouse, had benefited from using hubs like Delhi’s IGI Airport to ship goods abroad. Now, that advantage is gone.

Apparel Export Promotion Council (AEPC) Chairman Sudhir Sekhri had previously highlighted the chaos caused by 20-30 Bangladeshi trucks rolling into Delhi daily, snarling cargo terminals and inflating air freight rates. “Our exports were choking,” Sekhri noted. “This decision clears the runway.”

But the ripple effects could sting Bangladesh hard. Trade expert Ajay Srivastava of the Global Trade Research Initiative (GTRI) warns of logistical nightmares ahead. “Bangladesh’s exporters will face delays, higher costs, and uncertainty without India’s transit route,” he said. Landlocked Nepal and Bhutan, too, might feel the pinch, as their trade with Bangladesh could hit roadblocks. Srivastava also flagged a potential WTO snag: as members, both India and Bangladesh are bound to ensure “freedom of transit” for landlocked nations’ goods—a rule India’s move might skirt uncomfortably close to violating.

For Indian exporters, though, it’s a shot in the arm. The apparel, footwear, and jewelry sectors stand to gain as capacity constraints ease. Yet, with only cargo already in India allowed to exit under the old rules, the transition could still spark short-term hiccups.