India's recent imposition of port restrictions on goods from Bangladesh is raising concerns about potential disruptions to regional trade. Effective May 17, 2025, the new regulations limit the entry points for several key Bangladeshi exports, a move that is seen as a retaliatory measure following Dhaka's restrictions on Indian goods and growing diplomatic closeness with China.
The restrictions, outlined in a notification by India's Directorate General of Foreign Trade (DGFT), stipulate that readymade garments (RMG) from Bangladesh can now only enter India through the seaports of Nhava Sheva and Kolkata, effectively closing off previously accessible land routes. Several other categories, including processed foods, plastics, wooden furniture, and certain beverages, are entirely prohibited from entering via land routes, particularly through West Bengal and the northeastern states of India. Essential commodities such as fish, LPG, edible oil, and crushed stone are exempt.
The move is anticipated to significantly impact Bangladesh's export competitiveness, particularly for the garment industry, which constitutes a major portion of its trade with India. According to the Global Trade Research Initiative (GTRI), the restrictions could affect approximately $770 million worth of imports from Bangladesh, representing around 42% of total bilateral imports. The garment sector alone, which earned Bangladesh $618 million between April 2024 and February 2025, is expected to face substantial challenges due to the shift in import channels.
Bangladeshi exporters have voiced concerns that the port restrictions will lead to delays, increased costs, and overall disruptions in both bilateral and regional trade. The increased distance and logistical complexities associated with sea routes, compared to the previously utilized land ports, could erode profit margins and make it more difficult for Bangladeshi products to compete in the Indian market.
India's decision follows a series of trade limitations imposed by Bangladesh on Indian exports, including a ban on yarn through key land ports, restrictions on rice, and limits on items like paper, tobacco, and milk powder. These measures, coupled with a transit fee on Indian cargo, have strained trade relations between the two countries. Some experts suggest that India's actions are also influenced by Bangladesh's growing ties with China, exemplified by a recent $2.1 billion investment and cooperation agreement signed during a visit to Beijing.
The restrictions have sparked concerns about the potential for increased congestion at the designated seaports and the impact on supply chains. While the Indian government has not officially stated a geopolitical reason for its decision, the timing and nature of the restrictions suggest a retaliatory motive. Some Indian officials have pointed to "unreasonably high" transit charges and rigorous inspections imposed by Bangladesh on Indian exports as contributing factors to the strained trade conditions.
Despite the current trade tensions, there is hope for reconciliation through dialogue. The interim government in Bangladesh has expressed optimism that trade ties will remain stable and has indicated its intention to address any issues arising from the new measures through diplomatic channels. Data indicates that bilateral trade between the two nations stood at $12.23 billion up to February in FY25, with $10.40 billion in exports from India to Bangladesh and $1.83 billion in imports, highlighting the significant economic interdependence between the two countries.
