Ans. India and Bangladesh share deep-rooted historical, cultural, and economic ties. During the COVID-19 pandemic, India extended a transhipment facility to Bangladesh, allowing the latter to use Indian ports and airports for third-country exports. This temporary measure significantly boosted Bangladesh's export capacity during a global logistical crisis. However, India’s recent decision to revoke this facility marks a turning point, potentially affecting the dynamics of bilateral relations.

Background of the Facility

In 2020, amid severe logistical challenges caused by the pandemic, India allowed Bangladesh to tranship export cargo through its Land Customs Stations (LCSs) and Integrated Check Posts (ICPs), as well as via airports and seaports.
The gesture was humanitarian in nature, enabling Bangladesh to meet rising global demand, especially for ready-made garments (RMG) and medical supplies.

Economic Benefits to Bangladesh

The facility played a crucial role in maintaining Bangladesh's supply chains during the pandemic.
Bangladesh’s export performance improved substantially:
1. 2019-20: Total exports – $33.67 billion; RMG – $27.95 billion
2. 2020-21: Total – $38.79 billion; RMG – $31.46 billion
3. 2021-22: Total – $52.08 billion; RMG – $42.61 billion (35% growth)
The Dhaka-Delhi multi-modal route facilitated faster, cheaper delivery of goods to Europe and beyond.

Strategic and Commercial Significance

Global brands like Zara, H&M, Decathlon, and UNIQLO leveraged the transhipment route to meet rising demand.
Indian conglomerates such as Reliance and Aditya Birla Group also benefited from smoother imports of Bangladeshi garments.
India’s gesture went beyond economics — Delhi even bore environmental and infrastructural costs, expanding cargo terminals and creating a dedicated Transhipment Excellence Centre (TEC).

Implications of Withdrawal

On April 8, 2024, India withdrew the 2020 facility.
This move coincides with broader global supply chain challenges, such as Red Sea disruptions, forcing vessels to detour via longer routes like the Cape of Good Hope, thus increasing time and costs.
For Bangladesh:
1. Increased logistical costs and delays in third-country exports.
2. Reduced competitiveness, especially in high-volume, low-margin sectors like RMG.
For India:
1. Perceived rollback of regional goodwill may raise questions about its neighbourhood-first policy.
2. Could create opportunities for external actors, such as China, to expand influence in Bangladesh.

Bangladesh's export-driven growth, especially in RMG, pharmaceuticals, and processed foods, depends heavily on efficient logistical networks. Without rapid improvements in its own infrastructure—such as the Matarbari deep-sea port (expected by 2027)—Bangladesh remains reliant on regional connectivity. Hence, peaceful coexistence and deeper regional cooperation, particularly with India, are crucial.

India, on its part, must balance its domestic considerations with the long-term strategic advantages of regional leadership. Reviving such facilitative arrangements could enhance economic integration, boost mutual trust, and serve as a pillar of South Asian stability and prosperity.

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