India and Bangladesh Trade Dispute Grows as Yarn Imports Are Stopped
In a move reflecting escalating trade and diplomatic tensions, Bangladesh has suspended the import of yarn from India through five key land ports — Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari.
New Delhi: In a move reflecting escalating trade and diplomatic tensions, Bangladesh has suspended the import of yarn from India through five key land ports — Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari.
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The decision comes just days after India’s Central Board of Indirect Taxes and Customs (CBIC) abruptly terminated the transhipment facility that had allowed Bangladeshi export cargo to pass through India to third countries via its ports and airports.
India Ends Transhipment, Bangladesh Responds
The now-suspended transhipment facility, introduced in 2020, was crucial for Bangladesh’s exports to countries like Bhutan, Nepal, and Myanmar. The sudden halt may disrupt regional trade, particularly affecting landlocked nations such as Nepal and Bhutan, which relied on the corridor for seamless trade with Bangladesh.
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In retaliation or response, Bangladesh’s National Board of Revenue (NBR) announced the suspension of Indian yarn imports via land routes—an essential input for Bangladesh’s garment industry.
Geopolitical Frictions at Play
This development follows controversial remarks by Bangladesh’s interim government Chief Advisor Muhammad Yunus, who recently described India’s Northeast as “landlocked” and encouraged Chinese involvement in regional development. His statement drew sharp criticism in Indian strategic circles.
Adding to the concern, Bangladesh has reportedly invited China to invest in revitalising the Lalmonirhat airbase, located near India’s strategically sensitive Siliguri Corridor or “Chicken’s Neck”—a narrow stretch connecting mainland India to its northeastern states.
Trade Experts Weigh In
Ajay Srivastava, former Indian trade officer and Head of GTRI (Global Trade Research Initiative), noted that India has provided preferential, zero-tariff access to almost all Bangladeshi products—excluding alcohol and cigarettes—for over two decades.
He further suggested that Bangladesh’s growing strategic alignment with China, especially near sensitive Indian regions, may have influenced India’s decision to end transhipment support.
Potential Regional Fallout
This bilateral fallout could significantly impact regional trade connectivity in South Asia. The breakdown in India-Bangladesh cooperation could:
- Disrupt Bhutan and Nepal’s trade via Bangladesh
- Increase China’s strategic influence in South Asia
- Worsen trade costs for businesses on both sides
The suspension of yarn imports from India and the termination of the transhipment facility mark a notable downturn in India-Bangladesh trade relations. With strategic tensions rising and regional partners watching closely, the coming weeks will be critical in determining the future of cross-border connectivity in South Asia.
