NEW DELHI/DHAKA: India has withdrawn a transhipment facility for Bangladesh’s export cargoes to other countries via its land borders, in a fresh blow to Dhaka which is already reeling from steep US tariffs on its goods.
The move is expected to disrupt Bangladesh’s readymade garment exports and raise costs for trade with countries including Nepal, Bhutan and Myanmar, exporters said.
A circular from India’s customs department issued on Tuesday said it has decided to rescind a 2020 order allowing transhipment of Bangladeshi exports to third countries through India’s land customs stations to ports and airports in containers or closed-body trucks.
The facility has been withdrawn due to “delays and higher costs” hindering India’s own exports and creating backlogs, India’s external affairs ministry spokesperson said.
“This will stop Bangladesh’s exports to Nepal and Bhutan,” Yunus Hossain, a Dhaka-based trader, said.
In relation to readymade garments, Bangladesh’s biggest export, Bangladesh has always prioritised direct shipping, “so the impact will hopefully not be severe. But it does hamper an intra-regional potential,” said Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association.
The change comes as the US implements 37% reciprocal tariffs on Bangladeshi exports and is likely to increase logistical burdens, further straining Dhaka’s export competitiveness, said Selim Raihan, an economics professor at the University of Dhaka.
India is one of Bangladesh’s top trading partners, and the move is “inconsistent with the future prospects of an enhanced bilateral relationship,” Raihan said.
Trade ties between the neighbours, which share a 4,000 km (2,500 mile) border, have cooled since Bangladesh Prime Minister Sheikh Hasina fled the country amid mass protests last August and sought shelter in India.
Bangladesh’s commerce ministry did not respond to requests for comment.
Ajay Srivastava, founder of the Global Trade Research Initiative, said the decision may violate World Trade Organisation rules, which guarantee landlocked countries freedom of transit.
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