India’s Import Curbs to Hit 42% of Bangladesh’s Exports, Costing $770 Million

India’s latest trade restriction order, issued by the Ministry of Commerce and Industry on May 17, 2025, represents a major change in its trade relationship with Bangladesh. The move comes in response to Dhaka’s recent curbs on Indian goods and has significant economic implications for both sides. As per the Global Trade Research Initiative (GTRI), the new restrictions are expected to impact nearly 42% of Bangladesh’s exports to India, amounting to a loss of approximately $770 million.

Read More: When To Expect the India-US Trade Agreement?. 

What the New Trade Order Involves

The directive from India does not merely limit volumes or impose tariffs. Instead, it changes the mode and routes of entry. Several goods from Bangladesh, including readymade garments, processed food items, and plastic products, can now only be imported through specific sea ports such as Kolkata and Nhava Sheva. The order excludes land routes, which had previously been the dominant channels for cross-border trade.

Garments, a key export category from Bangladesh valued at around $618 million annually, are particularly affected. The rerouting requirement through distant sea ports poses logistical hurdles and is likely to reduce trade volumes due to increased costs and delays.

The Context Behind India’s Response

GTRI suggests that India’s move is a calculated response rather than a spontaneous policy shift. Since late 2024, Bangladesh has been tightening its trade policy towards India. These actions include:

• A ban on Indian yarn imports via the 5 major land ports
   
• Restrictions on rice exports
   
• Prohibitions on several Indian goods such as tobacco, powdered milk, and fish
   
• Imposition of a transit fee of 1.8 taka per tonne per kilometre on Indian cargo

These measures have disrupted Indian exports and created operational bottlenecks for Indian exporters. Delays and additional checks at Bangladeshi ports have led to growing dissatisfaction within the Indian export community, prompting calls for a tougher stance.

Strategic Withdrawal of Transhipment Privileges

India’s trade countermeasures gained momentum in April 2025 when it revoked a key transhipment facility granted to Bangladesh in 2020. This facility has allowed Dhaka to access European and Middle Eastern markets through Indian infrastructure, including access to the Delhi airport. The decision to revoke this facility for all countries except Nepal and Bhutan has significantly impacted Bangladesh’s logistics advantage.

Conclusion

While the economic fallout for Bangladesh from India’s import restrictions is estimated at $770 million, the long-term impact could extend beyond numbers. These trade decisions, taken in response to each other’s restrictions, may redefine the contours of India-Bangladesh relations, both economically and diplomatically.

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