Bangladesh faces major economic losses due to tension between the two countries

POBNEWS24, Dhaka, May 19, 2025 : The overall relationship between India and Bangladesh has been strained due to the strain in trade and economic relations. After the ouster of former Prime Minister Sheikh Hasina following student-led protests last August, an interim government led by Muhammad Yunus took power. This has broken down the bilateral economic relations between the two countries. As a result, Bangladesh will face serious losses. This is what was commented by Professor Dr. Arif Khan, an economist living in the UK. Although the decision is not yet effective officially, it is initially known that Bangladeshi ready-made garment exports to India will be allowed only through the sea ports of Kolkata and Nahava Sheva.
In response to the restrictions taken, India on Saturday limited the import of ready-made garments from Bangladesh only to the Kolkata and Nahava Sheva ports and banned the import of various types of consumer goods through 11 land border posts in the northeast. This is all that traders have learned so far.
Professor Dr. Arif Khan said the move by the Indian side comes more than a month after New Delhi ended a nearly five-year-old arrangement for Bangladeshi exports to third countries through Indian airports and ports amid tensions between the two sides.
Under the restrictions announced in an official notification issued by India’s Department of Foreign Trade, Bangladeshi ready-made garments (RMG) will be allowed to be exported only through the Kolkata and Nahva Sheva seaports. Professor Arif said this is expected to have a significant impact. This is because Bangladesh’s annual ready-made garment exports to India are worth about $700 million and 93% of these products are exported through land ports. However, the restrictions will not apply to Bangladeshi goods transported via India to Bhutan and Nepal.
It has been learnt that Bangladeshis will not be able to export various consumer goods and other products including ready-made garments, plastic and PVC products, wooden furniture, fruit-flavored and carbonated drinks, bakery and confectionery products, cotton and cotton waste through 11 land customs stations and check posts in Meghalaya, Assam, Tripura and Mizoram and Fulbari and Changrabandha posts in West Bengal.
“India has so far allowed exports of goods through all land customs stations (LCS), integrated check posts (ICPs) and seaports without undue restrictions,” Kartik Chakraborty, a trader at Petropol, told this correspondent. He said Bangladesh has imposed port restrictions on Indian exports, especially at LCSs and ICPs bordering seven northeastern states, despite the issue being raised for a long time. In addition, Bangladesh stopped exports of yarn from India through land ports from April 13, 2025, and Indian exports face strict inspections, resulting in significant delays. Indian rice exports through Hili and Benapole ICPs were also stopped from April 15, 2025.” “Locally produced goods from the northeastern states do not have access to the Bangladeshi market due to the land port ban imposed by Bangladesh. On the other hand, the northeastern states of Bangladesh have free access to the entire market, which creates an unhealthy dependency and is hampering the growth of production in the region,” said businessman Kartik Chakraborty. According to him, “Bangladesh has imposed an unreasonably high and economically unacceptable transit charge of Tk 1.8 per tonne per kilometer on Indian goods, which is hampering the movement of goods from the northeastern states to the hinterland of India through Bangladeshi territory. All decisions on the Indian side have been taken on the basis of equality and fairness. India has given more than what it expected in the policy of mutual cooperation, and Bangladesh has not reciprocated.”
It is learnt that the ban will also apply to Changrabanda and Fulbari LCS in West Bengal to prevent re-routing of Bangladeshi exports to the Northeast through the Siliguri corridor. These steps have also been taken to support local manufacturing in the North Eastern states and the target list of products will be reviewed to ensure fair and equitable growth in the North Eastern states in line with the plans of the Central Government of India.
A statistic shows that in FY 2024, the bilateral trade volume was $12.90 billion and Bangladesh was India’s largest trading partner in the subcontinent. India was Bangladesh’s second largest export partner, accounting for 12% of total exports. In FY 2024, India’s exports to Bangladesh were $11.06 billion and imports from Bangladesh were $1.8 billion during the same period. Prof. Dr. Arif Khan, told this correspondent, “India has repeatedly called on Bangladesh to stop the persecution of minorities, including Hindus, and has expressed concern about the rise of fundamentalism. Is there a government in Bangladesh now? Yunus is running on the back of the defeated forces against the independence movement in 1971 and the Pakistanis. He has shown the courage to ban the Awami League.”