In a move signaling escalating trade tensions, the Indian government has imposed significant restrictions on imports from Bangladesh, primarily affecting the ready-made garment (RMG) sector and several other commodities. Effective immediately, all ready-made garment imports from Bangladesh will only be permitted through the seaports of Kolkata and Nhava Sheva (Mumbai), effectively closing all land routes for these goods.
This decision, outlined in a notification issued by the Directorate General of Foreign Trade (DGFT) on May 17, 2025, is widely viewed as a retaliatory measure following Bangladesh's recent ban on Indian yarn exports via land ports, which came into effect on April 13, 2025. The restrictions also extend to other items, including fruits, processed foods, carbonated drinks, plastics, wooden furniture, and cotton yarn waste, which will no longer be allowed to enter India through land customs stations (LCSs) and integrated check posts (ICPs) in the northeastern states of Assam, Meghalaya, Tripura, and Mizoram, as well as the Phulbari and Changrabandha posts in West Bengal.
The impact of this decision is expected to be substantial, particularly for Bangladesh's RMG industry, which relies heavily on land ports for exports to India. According to Indian estimates, approximately 93% of Bangladesh's RMG exports to India, valued at around $700 million annually, pass through these land routes. The shift to seaports is likely to increase transportation costs and lead times, potentially affecting the competitiveness of Bangladeshi garments in the Indian market, especially for smaller exporters.
While the Indian government has not explicitly stated that the restrictions are a direct response to Bangladesh's yarn ban, many in the Bangladeshi export community view it as a reciprocal measure. Shams Mahmud, a leading garment exporter, told The Business Standard that the move to seaports would increase costs and affect timely delivery, especially for smaller exporters. He also noted that since Bangladesh did not restrict Indian imports through seaports, India is unlikely to block Bangladeshi goods via sea either.
The restrictions do not apply to Bangladeshi goods transiting through India destined for Nepal and Bhutan. Essential items such as fish, LPG, edible oil, and crushed stone are also exempt from the new regulations.
This recent development is part of a series of escalating trade disputes between the two nations. On April 9, 2025, India withdrew the transshipment facility it had granted to Bangladesh for exporting goods to third countries via Indian airports and ports, except for Nepal and Bhutan. This decision was reportedly influenced by a controversial statement made by the head of Bangladesh's interim government, Muhammad Yunus, in China, suggesting that India's northeastern states are landlocked and dependent on Bangladesh for access to the ocean.
These trade restrictions also align with India's "Atmanirbhar Bharat" initiative, which aims to promote economic self-reliance and boost local manufacturing in the northeastern states. By curbing imports through land ports, the Indian government hopes to encourage domestic production and reduce reliance on imports from Bangladesh.
The situation remains fluid, and the long-term implications of these trade restrictions are yet to be fully understood. However, it is clear that the relationship between India and Bangladesh is facing significant challenges, with potential consequences for regional trade and economic cooperation. Both countries need to engage in constructive dialogue to resolve these issues and ensure a stable and mutually beneficial trade relationship.
