New Delhi, April 9, 2025 — India has withdrawn a crucial transit facility that allowed Bangladeshi exports to third countries via Indian ports and airports, a move that is likely to reshape regional trade dynamics and heighten diplomatic tensions between the two neighbours.
The decision was formalised in a circular issued Tuesday by the Central Board of Indirect Taxes and Customs (CBIC), rescinding the earlier policy introduced in June 2020. The now-terminated facility had enabled Bangladesh to transship goods through Indian land customs stations en route to international destinations such as Nepal, Bhutan, and Myanmar.
“It has been decided to rescind… circular… dated June 29, 2020, as amended with immediate effect,” the CBIC stated. “Cargo already entered into India may be allowed to exit the Indian territory as per the procedure given in that circular.”
The move comes amid mounting pressure from Indian exporters, especially in the apparel sector, who have argued that the Bangladeshi cargo was congesting ports and air cargo terminals, thereby reducing competitiveness and raising logistics costs.
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), welcomed the decision, saying, “Now we will have more air capacity for our cargo.” Apparel Export Promotion Council (AEPC) Chairman Sudhir Sekhri added that 20 to 30 trucks from Bangladesh were arriving in Delhi daily, causing delays and raising freight costs. “Airlines were taking undue advantage, and Indian apparel exports were becoming uncompetitive,” he said.
Strategic and Diplomatic Undercurrents
While the official reasoning centres around trade logistics, the timing of the announcement coincides with a spike in regional diplomatic tensions following controversial remarks by Muhammad Yunus, chief adviser to Bangladesh’s interim government. During a recent visit to China, Yunus referred to Bangladesh as “the only guardian of the ocean” for India’s landlocked northeastern states, calling the region “an extension of the Chinese economy.” His comments drew sharp rebuke from Indian leaders.
Assam Chief Minister Himanta Biswa Sarma labelled the remarks “offensive” and “strongly condemnable,” warning they underscored the vulnerability of India’s strategic “Chicken Neck” corridor — the 22-kilometre-wide Siliguri Corridor that connects the northeast to the rest of India.
Legal Concerns and WTO Implications
Trade analysts also warn that India’s abrupt policy reversal could come under scrutiny at the World Trade Organization (WTO). Ajay Srivastava, founder of the Global Trade Research Initiative, pointed to Article V of the General Agreement on Tariffs and Trade (GATT) 1994, which mandates WTO members to ensure freedom of transit for goods to and from landlocked nations.
“Such transit must be free from unnecessary delays and not subject to duties. India and Bangladesh are both WTO members, and this could raise compliance concerns,” Srivastava noted.
He added that the move could also be at odds with the WTO’s Trade Facilitation Agreement, which aims to streamline and harmonise border procedures.
What’s Next?
According to the Indian government, the transshipment halt will not apply to Bangladeshi exports heading to Nepal and Bhutan via Indian land routes. However, shipments bound for other countries that previously relied on Indian ports and airports will now need alternative logistical solutions.
While India has clarified the decision was driven by domestic capacity constraints and not geopolitics, the broader regional implications — from economic cooperation to strategic trust — may prove harder to navigate.
