Bangladesh dollar trade to be hit by India’s port restrictions, may lose $770 million

India’s recent move to restrict port access for several Bangladeshi imports is poised to significantly disrupt Dhaka’s dollar-earning export sectors, especially garments and processed goods. The directive, issued by the Directorate General of Foreign Trade (DGFT) on May 17, redirects shipments from traditional land ports to just two seaports Nhava Sheva and Kolkata impacting port logistics in supply chain operations between the two nations.

As per the Global Trade Research Initiative (GTRI), the measure could affect up to $770 million worth of imports, or 42% of Bangladesh’s total exports to India. Garments, the country’s top export category, brought in $618 million between April 2024 and February 2025. These shipments will now rely exclusively on sea routes, sidelining key land crossings through West Bengal and India’s northeastern region routes that have long been integral to shipping ports and freight handling.

Additionally, about $153 million worth of products including flavored drinks, plastic goods, wooden furniture, and cotton waste are now entirely barred from land-route access. However, essential commodities like LPG, edible oils, fish, and crushed stones remain exempt. Transit goods headed to Nepal and Bhutan via India also face no restrictions.

While India has not officially cited geopolitical motives, analysts view the move as a countermeasure to Bangladesh’s recent trade barriers on Indian goods, such as a yarn ban, and transit fee imposition actions that broke from earlier duty-free arrangements under regional cooperation. This shift raises questions about escalating India port congestion and the broader role of smart port and supply chain systems in resolving such tensions.

According to Ajay Srivastava of GTRI, these restrictions may represent a strategic response by India, which is already navigating port congestion in India and broader regional supply chain complexities.