India retracts transshipment facility for Bangladesh due to tariff conflicts

India has revoked the transshipment facility that allowed Bangladesh to use its land routes and ports for exporting goods to countries like Bhutan, Nepal, and Myanmar. The Indian Central Board of Indirect Taxes and Customs announced the policy change on Monday, effective immediately. This decision comes at a time when Bangladesh is grappling with a 29% tariff on its exports to the US and facing strained relations with India over recent political remarks.

The facility, introduced in June 2020, had allowed Bangladesh to transit goods through Indian ports and airports for regional exports. However, India is believed to be upset by comments made by Bangladesh’s interim government adviser, Muhammad Yunus, about India’s northeastern states, which he described as landlocked and suggested Bangladesh was the “guardian of the ocean” for the region.

Indian Foreign Ministry Spokesman Randhir Jaiswal explained that logistical delays and increased costs were hindering India’s own exports, which led to the cancellation of the facility. However, he clarified that the move would not impact Bangladesh’s exports to Nepal or Bhutan.

The decision is expected to boost India’s exports, including textiles, footwear, and gems. Indian trade groups like the Apparel Export Promotion Council (AEPC) had previously called for a suspension of the transshipment facility due to congestion and higher costs. Without this arrangement, Bangladesh’s exporters could face increased delays, logistical challenges, and uncertainty, according to the Global Trade Research Initiative (GTRI).

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