India Cancels Bangladesh’s Cargo Transit to Third Countries, Ensures Trade with Nepal and Bhutan Remains Unaffected
In a significant policy shift, India has officially withdrawn the transshipment facility that allowed Bangladesh to export goods to third countries via Indian land borders. Introduced in 2020, the facility enabled Bangladeshi cargo to move through Indian land customs stations and be shipped from Indian seaports and airports to third-country destinations. The Indian government has now rescinded this arrangement, citing logistical delays and increased costs to its own export processes.
The announcement was made through a notification issued by India’s Central Board of Indirect Taxes and Customs (CBIC), which stated that while other transit agreements remain in place — such as cargo movement between mainland India and the northeastern states through Bangladesh — the special permission granted to Bangladeshi exports for third-country destinations through Indian territory has been revoked.
This decision is expected to have serious implications for Bangladesh’s export sector, especially its ready-made garment (RMG) industry, which had begun using this route as a cost-effective and time-saving option for accessing global markets. Businesses and trade bodies in Bangladesh have expressed concern that the cancellation could increase shipping costs, extend delivery times, and complicate trade logistics — especially for exports to countries like Nepal and Bhutan that rely heavily on land routes.
India, however, clarified that the new directive would not impact direct exports from Bangladesh to Nepal and Bhutan. The bilateral trade routes under existing trade agreements for these two landlocked neighbors will continue to operate as usual. Still, the absence of access to Indian seaports could create strategic disadvantages for Bangladesh in terms of diversification and competitiveness in international markets.
Trade experts have raised concerns about the regional implications of the move, noting that it could hinder broader efforts at regional economic integration under initiatives such as BBIN (Bangladesh-Bhutan-India-Nepal) and BIMSTEC. Furthermore, questions are being raised about compliance with the World Trade Organization (WTO) rules, which stipulate freedom of transit for landlocked nations.
As of now, the Government of Bangladesh has not issued an official response to the Indian decision. However, pressure is mounting from business communities to engage diplomatically and renegotiate the terms or explore alternative transit options to maintain export momentum.
The revocation of this facility comes at a time when Bangladesh is already navigating multiple trade challenges, including shifting tariff structures and changes in global trade dynamics ahead of its graduation from Least Developed Country (LDC) status in 2026.
This development is seen by many as a setback for regional connectivity and a reminder of the fragility of bilateral trade arrangements in South Asia, where infrastructure and policy coordination play a critical role in sustaining economic growth and cooperation.