Tensions are escalating between India and Bangladesh, marked by recent trade restrictions and geopolitical maneuvering. India has recently imposed restrictions on imports from Bangladesh through land ports, a move impacting a significant portion of bilateral trade. This decision follows controversial statements made by Bangladesh's interim Chief Advisor, Muhammad Yunus, regarding Northeast India and Bangladesh's role in regional economics.

The Indian government's directive, issued by the Directorate General of Foreign Trade on May 17, 2025, restricts key Bangladeshi exports from entering India via land routes. Ready-made garments, Bangladesh's top export, can now only enter through Kolkata and Nhava Sheva seaports. This restriction also applies to processed food, plastic goods, and wooden furniture. The move is expected to affect approximately $770 million in Bangladeshi exports, representing about 42% of total shipments to India.

These restrictions are viewed as a retaliatory measure following trade curbs imposed by Bangladesh, including bans on Indian yarn at key ports and limits on imports of rice, paper, tobacco, and milk powder. Additionally, Bangladesh has introduced transit fees on Indian cargo, ending years of free movement under regional agreements. Indian textile manufacturers have long voiced concerns over competition from Bangladesh, citing advantages gained from duty-free Chinese fabrics and export incentives that allow Bangladeshi exporters to undercut Indian prices.

Adding to the complexity, Muhammad Yunus's recent remarks during a visit to China have stirred controversy. Yunus referred to the northeastern states of India as "landlocked," suggesting Bangladesh is the sole guardian of the Indian Ocean and implying an economic dependence on Bangladesh. These statements were made during an investment summit in Beijing, where Yunus urged Chinese companies to invest in Bangladesh, positioning it as an extension of the Chinese economy. These comments have been perceived by many in India as undermining India's sovereignty and leveraging Bangladesh's strategic position to court Chinese investment.

The timing of Yunus's visit to China and his subsequent remarks have raised concerns in India, particularly given the change in Bangladesh's political landscape. Since the ouster of Sheikh Hasina's government, Yunus has signed deals with Beijing, signaling a potential shift in geopolitical alignment.

The closure of border checkpoints and imposition of trade restrictions are already impacting industries in Northeast India, particularly in Assam, Meghalaya, and Tripura. These states rely heavily on cross-border trade with Bangladesh, and the new restrictions are causing disruptions and financial losses for local exporters and manufacturers.

Historically, the India-Bangladesh border has been a sensitive area with issues such as boundary demarcations, water sharing, and transnational crime affecting relations between the two countries. Despite close ties, incidents of border killings and disputes have occurred, contributing to the complexity of the relationship.