India ends transshipment for Bangladesh exports: What it means for trade

India cited logistical issues for scrapping the facility, saying it caused major congestion at ports and airports, leading to delays, higher costs, and export backlogs

India has formally revoked the transshipment facility that allowed Bangladesh to export goods to third countries via Indian land customs stations, ports, and airports. This decision, effective April 8, marks the end of a nearly five-year arrangement established in June 2020. The move is expected to significantly impact Bangladesh’s trade logistics and costs, particularly for exports destined for Western markets. 

According to an April 8 circular from India’s customs department, the earlier 2020 agreement facilitating trans-shipment of Bangladeshi export goods through Indian land customs stations to ports for destinations in Europe, West Asia, and beyond has been formally withdrawn.

 

What was the transshipment agreement?

The transshipment facility enabled Bangladeshi exporters to transport goods through Indian territory to reach third-country destinations. Under this arrangement, cargo from Bangladesh could pass through Indian Land Customs Stations (LCSs) en route to ports and airports, such as Indira Gandhi International Airport in New Delhi. This facilitated smoother trade flows for Bangladeshi exports to regions like Europe, West Asia, and beyond. 

 

Introduced in 2020 by India’s Central Board of Indirect Taxes and Customs (CBIC), the agreement aimed to enhance regional connectivity and trade cooperation. It provided Bangladeshi exporters with an alternative route to global markets while leveraging India’s logistical infrastructure

 

Why was it revoked?

India cited logistical challenges as the primary reason for rescinding the facility. According to Randhir Jaiswal, spokesperson for the Ministry of External Affairs, the transshipment arrangement led to ‘significant congestion’ at Indian airports and ports. This congestion resulted in delays, increased costs, and backlogs that hindered India’s own export processes. 

“This was a facility that was extended to Bangladesh in 2020. The trans-shipment facility extended to Bangladesh had, over a period of time, resulted in significant congestion at our airports and ports,” Jaiswal said. 

“Logistical delays and higher costs were hindering our own exports and creating backlogs. The facility, therefore, has been withdrawn with effect from April 8, 2025,” he said. 

The decision also follows strained bilateral relations between India and Bangladesh. Recent remarks by Chief Adviser of Bangladesh’s interim government Muhammad Yunus, advocating for China’s economic involvement in Northeast India, reportedly aggravated tensions. Yunus described Bangladesh as the ‘guardian of the ocean’ for the region, a statement interpreted as leveraging India's northeastern states' landlocked status.

 

India-Bangladesh: Strained bilateral relations

Relations between India and Bangladesh have been in freefall since former premier Sheikh Hasina’s government was ousted following weeks of student-led protests last August and the interim government headed by Yunus assumed office. 

Tensions between India and Bangladesh have escalated following the ousting of Sheikh Hasina’s administration in August last year after student-led protests, and the formation of the interim government led by Yunus. New Delhi has voiced repeated concerns over the treatment of minorities in Bangladesh, especially Hindus, and has flagged a rise in radical elements. 

Just before a scheduled meeting between Yunus and Prime Minister Narendra Modi on the sidelines of the Bimstec Summit in Thailand, the Bangladeshi interim leader made remarks highlighting the dependence of India’s northeast on Bangladeshi territory for ocean access, while courting Chinese investors. 

“This opens up a huge possibility, this could be an extension of the Chinese economy,” Yunus had said during a business gathering in China, referencing the nearly 1,600-km border shared between Bangladesh and India’s northeast.