Trade Restrictions against Bangladesh

Why in the News?
 

India has taken a sharp u-turn from its traditionally cooperative trade nature with its eastern neighbour -Bangladesh. In May 2025, India had put trade restrictions on some of the Bangladeshi readymade garments and other goods.

 

What is the Scope of these Trade Restrictions?
 

• The restrictions apply to Ready-Made Garments (RMG), Plastics, Melamine, Furniture, Juices, Carbonated drinks, Bakery items, Confectionery, and Processed foods.
  • Essential items such as Fish, LPG, Edible oil, and crushed stone are exempt.
  • Goods transiting through India from Bangladesh to Nepal and Bhutan are also unaffected.
• Previously, 93% of Bangladesh’s exports to India moved through direct land routes (through Northeastern region) for nearly USD 740 million annually.

 

Why did India Impose trade restrictions on Bangladesh?
 

• Bangladesh move to China: India imposed trade restrictions to express displeasure with Bangladesh’s interim government led by Mohammed Yunus, which has moved closer to China and Pakistan, straining India-Bangladesh relations. Eg: Yunus inviting Chinese access to India’s northeast during his China visit triggered India’s concerns.
• Political statement against the North East: India blocked access to its Northeast markets for Bangladesh’s key garment exports in response to recent political comments that called Northeast India landlocked and claimed Bangladesh is its gateway to the sea.
• Signaling Disapproval of Political Moves: India seeks to signal its objection to the interim government’s ban on the Awami League and its deviation from democratic norms promised to the international community.

 

Why did India Impose trade restrictions on Bangladesh?
 

• Reciprocal Response to Bangladeshi’s Trade: India put trade restrictions on Bangladesh mainly because Bangladesh was making it harder for Indian products to enter their country.
  • Bangladesh started charging extra fees for Indian goods passing through and made strict checks on Indian products.
  • At the same time, Bangladesh’s products could easily enter India’s northeast region. India felt this was unfair.
  • So, to balance things out, India decided to make it harder for some Bangladeshi goods (like ready-made garments and food items) to enter India through the usual land routes.
  • Now, these goods have to take a longer, more expensive route through bigger ports like through Kolkata port (West Bengal) or Nhava Sheva port (Maharashtra).
• Bangladesh moves to China: Another reason is that Bangladesh’s leaders have recently been getting closer to China and made some comments that upset India. So, India’s restrictions are also a way to show that it’s unhappy with these actions.
   

THE MAJOR REASON: Political Statements by Yunus about India’s northeastern region during his China visit: Described India’s northeast as landlocked: Yunus publicly referred to the northeastern region of India as lacking direct access to the sea, highlighting its geographical constraints. Eg: He particularly said that the region is dependent on access through neighboring countries like Bangladesh. Invited China to access the region via Bangladesh: He suggested that China could use Bangladesh as a transit route to reach India’s northeast, implicitly offering strategic passage. Eg: During his March 2025 China visit, he proposed trade and connectivity links that would allow China to reach the northeast. His comments were seen as aligning with China’s Belt and Road ambitions in South Asia, alarming Indian policymakers. His comments moreover undermined India’s regional security concerns and National integrity too by involving China in a sensitive area.

• • At present there are 11 land transit points in the Northeast region in order to trade with Bangladesh (3 in Assam; 2 in Meghalaya; 6 in Tripura).

 

POLITICAL INSTABILITY IN BANGLADESH THAT HURTS INDIAN INTERESTS Bangladesh is facing Election delays for more than 6 months now. If Bangladesh doesn’t have elections soon, things could get more unstable—like protests, violence, or even more extreme groups causing trouble. This chaos could spill over into India’s nearby states (like Assam and Tripura), making it harder to keep the borders safe. If there’s no clear, stable government in Bangladesh, India can’t easily make deals or work together on big projects (like sharing electricity or building roads and railways through Kaladan project).

 

• Affects Bangladesh more than India: The rerouting of exports through distant seaports is expected to sharply raise logistics costs, disrupt supply chains, and limit market access, particularly for the RMG sector.
  • According to the Global Trade Research Initiative (GTRI) estimates, that goods worth USD 770 million (about 42% of total bilateral imports) are affected.

• India should maintain dialogue with all major political actors in Bangladesh — including the Awami League, BNP, and civil society — to encourage democratic transition and ensure long-term regional stability.
• India must ease trade restrictions while using diplomatic channels to address security concerns, preventing alienation and preserving influence in Bangladesh and the Northeast region.

 

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