India’s New Rules Threaten Key Bangladeshi Exports

India continues to enjoy a substantial trade surplus with Bangladesh, as the volume of Bangladeshi imports from India vastly exceeds its exports. In the 2023–24 fiscal year, Bangladesh imported goods worth $9 billion from its neighbour, while exporting only $1.57 billion worth of products.

Despite India granting duty-free access to almost all Bangladeshi products in 2011—excluding arms and narcotics—Bangladesh was initially slow to capitalise on the opportunity. However, exports began to grow steadily, crossing the $1 billion mark for the first time in the 2018–19 fiscal year.

Concerns have resurfaced about the future of Bangladesh’s exports to India following fresh restrictions imposed by the Indian government. A recent order now prohibits the import of Bangladeshi ready-made garments through land ports. Instead, these products must now be shipped through Kolkata and Nhava Sheva seaports.

The new restrictions also affect the export of several other products—including fruits, fruit-flavoured drinks, soft drinks, processed foods, plastic items, yarn and its by-products, and furniture—to Indian states such as Assam, Meghalaya, Tripura, and Mizoram. These goods can no longer be transported via land customs stations or integrated check posts, including Changrabandha and Fulbari in West Bengal.

Export activities through several land ports in Bangladesh came to a halt following the announcement of these measures.

Officials in Bangladesh are exploring diplomatic channels to resolve the issue, including government-level discussions with India.

This is not the first setback for Bangladeshi exporters this year. In April, India revoked the transhipment facility that allowed Bangladesh to use Indian ports for shipping goods to third countries—an arrangement that had been in place since June 2020.

Ready-made garments remain Bangladesh’s top export item to India, accounting for $548.8 million in the last fiscal year. Exporters are now apprehensive that the shift to seaports may lead to delays and increased costs, impacting competitiveness.

Other affected sectors include processed agricultural products, with exports valued at $156.8 million, plastic products at $44 million, cotton waste and yarn at $31.3 million, and furniture at $6.5 million during the last fiscal. As most of these goods were previously transported via land ports, stakeholders fear that the new restrictions could severely hamper export performance across multiple sectors.