A setback for Bangladeshi exporters

Bangladesh's apparel industry is reeling after India’s unexpected decision to revoke a key transshipment facility for Bangladeshi export cargo destined for third countries via Indian airports and seaports. The move is expected to significantly disrupt the Ready-Made Garment (RMG) sector Bangladesh’s largest export industry and increase shipping costs, particularly for goods routed through major Indian transit points like New Delhi airport.

The announcement, issued on April 8 by India’s Central Board of Indirect Taxes and Customs, rescinds the earlier directive from June 29, 2020, which had allowed transshipment of Bangladeshi cargo across India. This abrupt policy shift comes as a surprise, especially following recent positive discussions between Bangladesh’s interim Chief Adviser Muhammad Yunus and Indian Prime Minister Narendra Modi, which were seen as a step towards strengthening bilateral ties.

The Indian Ministry of External Affairs later clarified that the change would not impact trade involving Nepal and Bhutan landlocked countries whose rights to transit are safeguarded under World Trade Organization (WTO) provisions.

India defended its decision by citing growing congestion at its ports and airports, a situation it attributes in part to the Bangladesh transshipment route. Additionally, the Apparel Export Promotion Council of India stated that the move responds to persistent calls from Indian exporters to restrict the use of Indian logistics infrastructure by Bangladeshi shipments, arguing that it would help optimize freight rates and alleviate domestic logistical pressures.

For Bangladesh’s garment exporters, however, the decision poses a new logistical challenge that threatens to impact delivery schedules, erode competitiveness, and increase the cost of fulfilling orders in key Western markets.