Kolkata, May 19 : In a significant shift in trade policy, India’s recent decision to restrict imports from Bangladesh is projected to cause an estimated economic loss of $770 million to the neighbouring country, accounting for nearly 42% of total annual exports to India, according to a new analysis by the Global Trade Research Initiative (GTRI).
Strategic Shift in Trade Policy
The Indian government, through a notification issued on May 17 by the Ministry of Commerce and Industry, announced a restriction on several key imports from Bangladesh — including garments, processed food items, and plastic goods. These items can now only be imported through select sea ports such as Kolkata and Nhava Sheva, while land-border trade routes have been largely closed to these goods.
GTRI suggests this move signals a strategic and political shift in India’s trade posture — interpreted as a response to recent restrictive actions taken by Bangladesh and its increasing tilt toward China in diplomatic and economic dealings.
Retaliation to Trade Barriers Imposed by Dhaka
Since December 2024, Bangladesh has imposed several barriers on Indian goods, including restrictions on cotton yarn through five major land ports, export controls on rice, and bans on a range of Indian products including tobacco, fish, and milk powder. In addition, a transit fee of 1.8 Bangladeshi Taka per ton per kilometre has been levied on Indian cargo, significantly increasing logistics costs.
These actions severely impacted Indian exporters and prompted widespread calls from Indian trade associations for a reciprocal response. India’s latest restrictions follow the April 2025 cancellation of a key transit facility granted to Bangladesh in 2020, which allowed Dhaka to use Indian infrastructure — notably Delhi airport — for shipments to Europe and the Middle East. That privilege is now reserved exclusively for Nepal and Bhutan.
Garment Industry Hit Hard
One of the biggest sectors affected is Bangladesh’s garment industry, with exports to India previously valued at $618 million annually. The new rules now limit entry of these products to two seaports, severely curtailing access via land routes, which were previously the main channels for such goods.
Geopolitical Tensions Rise After PM Yunus’ Remarks
Tensions between the two nations were further strained following remarks made by Bangladesh’s acting Prime Minister Muhammad Yunus during his recent visit to China. Yunus claimed that India’s northeastern states are landlocked and dependent on Bangladesh for maritime access, positioning Bangladesh as the “sole guardian” of the Indian Ocean. He also extended an invitation to China to use Bangladesh as a strategic trade corridor.
These comments have been widely perceived in India as provocative, sparking fresh concerns over regional stability and diplomatic ties. India’s new import measures are viewed as part of a broader strategic response to these developments.
Concerns Over Regional Stability
This rising friction between India and Bangladesh — traditionally close trade and development partners — is now drawing attention for its potential impact on South Asia’s regional economic balance. With both countries vying for influence and partnerships, particularly amid growing Chinese involvement in the region, policymakers are watching the developments closely.
As trade tensions escalate, stakeholders across industries in both nations are likely to face disruptions. Whether diplomacy will prevail in resolving the standoff remains to be seen.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.