India has officially withdrawn the transshipment facility previously extended to Bangladesh for exporting goods to third countries via Indian ports and airports. The decision, which came into effect on April 8, 2025, was announced by the Ministry of External Affairs (MEA) and is being interpreted as a response to recent actions by Dhaka that have impacted the bilateral relationship.
The transshipment facility, introduced in June 2020, was designed to boost regional connectivity and economic cooperation. It allowed Bangladesh to move export cargo through India’s land customs stations to major airports and seaports, particularly for shipments destined for Bhutan, Nepal, and other regional partners. The move had initially been welcomed as a sign of strengthening ties and regional integration under India’s “Neighbourhood First” policy.
However, according to the MEA, logistical pressures have increasingly disrupted the system. Indian ports and airports have been experiencing growing congestion, leading to delays in the movement of Indian exports and an overall backlog. The Ministry stated that this inefficiency was beginning to impact the competitiveness of Indian businesses, particularly in time-sensitive sectors like pharmaceuticals, textiles, and electronics.
While the official reasoning highlights logistical constraints, the MEA also pointed to “recent developments” in bilateral ties with Bangladesh that have influenced the decision. Although no specific incident was cited, observers believe the move is partially a response to perceived diplomatic friction. Tensions have reportedly escalated over issues such as Bangladesh’s growing defense and economic cooperation with China, and controversial statements from certain Bangladeshi leaders that India viewed as unfavorable to its interests—particularly concerning its northeastern region.
MEA spokesperson Randhir Jaiswal emphasized that the withdrawal of the facility should be seen in the broader context of India’s strategic and regional interests. He reiterated that India continues to value its relationship with Bangladesh, describing it as a crucial partner in South Asia. He also underlined that India remains committed to fostering a democratic, inclusive, and prosperous Bangladesh, and expressed hope for continued constructive engagement between the two countries.
The impact of this decision will be particularly felt by Bangladesh’s export sector, notably the readymade garments industry, which heavily relied on the transshipment route to meet delivery schedules in third-country markets. Without access to the more direct Indian transit corridor, Bangladeshi exporters will now have to explore longer and costlier alternatives, such as routing cargo through their own ports or relying more heavily on facilities in Sri Lanka or Singapore.
However, it is important to note that the withdrawal applies specifically to the transshipment of Bangladeshi goods through Indian airports and seaports for third-country exports. It does not affect the existing transit arrangements for Bangladeshi goods moving to Bhutan and Nepal through Indian territory—those remain intact under bilateral and regional agreements.
The move has raised concerns about the future trajectory of India-Bangladesh economic cooperation. For years, both countries had worked to improve connectivity and trade through rail, road, and river routes. This development, while limited in scope, may prompt both sides to reassess the direction and sustainability of that momentum.
Economic analysts believe that unless the two countries open diplomatic channels to address the underlying causes of the fallout, the transshipment issue could lead to a broader erosion of trust. On the other hand, some experts see this as a calibrated signal from India, meant to assert its strategic discomfort without entirely disrupting the bilateral relationship.
As regional geopolitics continues to evolve—with China increasing its footprint and economic stakes in South Asia—India’s decisions in its neighborhood are being closely watched. The transshipment withdrawal serves as both a policy recalibration and a diplomatic message, suggesting that economic privileges extended by India will be closely tied to the overall tone and tenor of its bilateral ties.
Going forward, much will depend on how Dhaka responds, and whether both nations can navigate their differences through dialogue and cooperation. India and Bangladesh share deep historical, cultural, and economic ties. Sustaining that relationship will require careful diplomacy and mutual respect amid growing strategic complexities.