By banning imports to India from Bangladesh through land ports, New Delhi has hit back squarely against Dhaka for Chief Advisor of the interim government of Bangladesh Mohammed Yunus saying that he would help turn north-east India into a captive market for China. The latest was a ban on import of certain categories of jute products including bags into India from Bangladesh from the land borders starting 13th August 2025. Imports will only be permitted through the Nhava Sheva port Mumbai.
This ban has hit hard the export of garments from Bangladesh, most of which reached India through land routes to West Bengal. The closure of the land ports has also jeopardised the export of Bangladeshi garments to third countries through Indian sea ports.
Kolkata Port and Nhava Sheva Port in Mumbai are open to Bangladeshi consignments, but sending the export items through these routes is not a viable commercial proposition for Dhaka. There is no direct container vessel service between Chittagong Port and Nhava Sheva. Goods must make a detour via a Sri Lankan Port and await transhipment. The container vessel service between Chittagong Port and Kolkata Port is irregular.
The export of processed food, beverages and soft drinks from Bangladesh to Meghalaya and other north-eastern Indian states has also been hit. These items enjoyed a large market in north-east India where Bangladeshi producers used to send them through direct land routes.
On a visit to Beijing in March, Mohammed Yunus suggested that the Chinese government should establish an economic foothold in Bangladesh and leverage its strategic position as the “only guardian of the ocean” for the landlocked north-eastern region of India and made the audacious comment that this region could be “an extension of the Chinese economy.”
Mohammed Yunus’ overtures to China during his Beijing visit were a well-calculated move. The Economic and Social Council of the UN General Assembly adopted a resolution on November 11, 2021, that Bangladesh would graduate from the status of a least developed country on November 24, 2026.
Ironically, this welcome development has set the alarm bells ringing in Dhaka. For, as a developing country, Bangladesh will lose the benefit of duty free access of its products to markets in the European Union. The Ministry of Finance of Bangladesh has calculated that the graduation would lead to exports from Bangladesh being subjected to a tariff of 6.7 percent, leading to a fall in exports by 14.3 percent in a year. The largest decline in exports will be for the textile and apparel sector, estimated at 14.7 percent, followed by food and leather. The estimated loss of exports to the EU could be 19 percent.
In this scenario, Beijing’s promise to provide duty-free and quota-free entry of Bangladeshi products to China has come as a heaven-sent opportunity for Dhaka; prompting the interim government to kowtow to Beijing. In 2022, China granted duty-free access to 98 percent of Bangladeshi goods, especially leather and leather goods.
To humour Beijing, Bangladesh banned the import of yarns from India through land ports in April 2025. China stands to benefit from this move by Dhaka. In 2024, over 37 percent of the total yarn imports by Bangladesh were sourced from China; India being the top supplier with a market share of 54 percent.
The backlash of New Delhi to the move of Bangladesh to humour China at the expense of India started in April when a transhipment deal of 2020 that allowed Bangladesh to export cargo to third countries via Indian land borders was cancelled. The big announcement came on 17th May that readymade garments from Bangladesh could not be imported through the land borders. Cotton, processed food and wooden furniture were barred from at least six entry points to north-east India.
The third instalment of Indian restrictions came on 27th June when India banned through the land routes the import from Bangladesh of flax yarn waste, raw jute, jute rolls, flax yarn, jute yarn, food grade yarn, linen fabrics, linen and cotton blended fabrics and less processed woven fabrics. Bangladesh exported about $150 million worth of these nine products to India in 2024-25, about nine percent of its total exports to India. The restrictions of 17th May stalled the export of goods worth $500 million, or 31 percent of total exports. Thus, Bangladesh has lost 40 percent of its total exports to India.
The closure of the land routes to India has hit Bangladesh hard as 81 percent of the total Bangladeshi exports to India in 2024-25 were conducted via land ports. Exporter groups in Bangladesh are worried that this closure is going to hit manufacturers in Bangladesh hard.
A senior manager of Bangladesh-based garment exporter AKH Group has been quoted in a report in Prothom Alo that exports via land routes that would take a day or two to reach their destinations would now take up to 21 days by the sea route. This delay would damage exports.
Besides garments, the restrictions on the export of processed food, plastic goods, furniture, yarn waste and fruit drinks, amounting to $77 million in 2024, would hit 166 exporters, serving five north-eastern states in India. “We had built a strong market in these Indian states which will be very difficult to retain now,” PRAN-RFL Group Chairman Ahsan Khan Chowdhury has been quoted in Prothom Alo. Furniture manufacturer Hartil Group is worried that the export of furniture would be hit.
According to the Export Promotion Bureau of Bangladesh, in 2023-24 Bangladesh exported to India ready-made garments worth $550 million, processed agricultural products worth $160 million, plastic products worth $ 44 million and furniture worth $6.5 million.
With the cancellation of the transhipment facility to third countries through India, businessmen are worried that it will be a new challenge to send the export items to their destinations. In 2021-22, Bangladesh exported garments worth $43 billion, making it the second largest apparel exporter in the world. More than four million people are engaged in the garment industry in Bangladesh. The US is the largest destination for Bangladeshi garments; accounting for 21.5 percent of the exports; followed by the EU, the UK and Canada.
On the other hand, Indian textile products are now offering stiff competition in export markets which have so long been the domain of Bangladesh; another cause of heartburn for Dhaka. When Bangladesh graduates to the status of a developing country from that of a least developed one, the tang of this competition from India will only increase as Bangladeshi products will lose the benefit of tariff-free trade. Moreover, now with India signing a free trade agreement with the U.K., Indian exports of textile products to Great Britain and through it to other countries in Europe are poised for a quantum jump. India is thus set to emerge as a textile export powerhouse, to the detriment of Bangladesh. The cost Dhaka is paying to curry favour with China is high. India has hit Bangladesh hard on the trading front.