Bangladesh’s textile exports to India disrupted after land route ban

India has formally barred several categories of imports from Bangladesh through northeastern land customs stations, effective May 17, 2025. The move comes via a notification issued by the Directorate General of Foreign Trade under the Ministry of Commerce and Industry, altering port-of-entry norms for Bangladeshi-origin goods. From now on, only two seaports — Nhava Sheva in Mumbai and Kolkata Port — will be permitted as legal entry points for designated Bangladeshi goods into India.

This policy shift directly affects a wide spectrum of exports from Bangladesh, including processed foods, fruit-flavored and carbonated beverages, wooden furniture, plastic articles, cotton yarn waste, dyes, and notably, textiles and ready-made garments (RMG). These goods will no longer be allowed entry via historically critical land customs checkpoints in Assam, Meghalaya, Tripura, Mizoram, and West Bengal — specifically Changrabandha and Fulbari.

The Indian government has clarified that the restrictions do not apply to imports of fish, edible oil, liquefied petroleum gas (LPG), and crushed stones. However, the blanket nature of the curbs on textile-related shipments is expected to severely disrupt Dhaka’s key export pipeline to its second-largest trading partner.

How Will This Impact Bangladesh’s Textile and RMG Exports to India?

The most immediate casualty of the decision is Bangladesh’s thriving RMG sector, a cornerstone of the country’s economy that exports garments worth billions globally. While India is not Bangladesh’s top export destination, the land-based route provided crucial logistical advantages for low-cost, high-volume textile consignments aimed at Indian wholesalers and retailers in bordering states.

Industry experts estimate that nearly 42% of all Bangladeshi imports into India, worth roughly USD 770 million, entered through the now-blocked land channels. By diverting all traffic to maritime ports, Bangladeshi exporters will now have to bear significantly higher freight costs, customs clearance delays, and shipping insurance premiums — all of which reduce pricing competitiveness and squeeze profit margins.

Moreover, Bangladeshi small and medium exporters reliant on cross-border truck shipments now face uncertainty, particularly for low-margin goods such as T-shirts, undergarments, and fabric-based accessories. These account for a large share of regional textile commerce and depend on just-in-time delivery models.

What Is the Trade Deficit Between India and Bangladesh and How Does This Move Widen It?

India maintains a substantial trade surplus with Bangladesh. According to official data, the bilateral trade gap stood at USD 9.2 billion for the fiscal year ending March 2024. India exported nearly USD 13.2 billion worth of goods to Bangladesh, while imports stood at just over USD 4 billion. This imbalance has been a longstanding point of contention in Dhaka, where policymakers and business chambers have consistently pushed for better access to Indian markets, especially through expedited border trade routes.

The latest import route restrictions are likely to exacerbate this gap further. By making Bangladeshi goods costlier and less competitive in Indian markets, the curbs may reduce overall import volumes, widening the deficit unless other policy correctives are introduced.

What Prompted This Tit-for-Tat Trade Retaliation?

While India has not publicly linked the new restrictions to any specific Bangladeshi policy decision, analysts interpret the move as retaliation for several protectionist actions by Dhaka in recent months. These include curbs on Indian yarn and rice exports, imposition of non-tariff barriers on FMCG goods, and new trade-facilitation deals with China under the caretaker leadership of Chief Adviser Muhammad Yunus.

India had already withdrawn a key transshipment facility in April 2025 that allowed Bangladeshi cargo to transit Indian territory en route to third countries like Nepal, Bhutan, and Myanmar. That decision came amid rising security concerns and geopolitical recalibrations after Bangladesh’s growing alignment with Beijing in trade and infrastructure partnerships.

Together, these decisions suggest a broader pattern of policy friction and eroding trade confidence between the two neighbors, despite historic ties and regional cooperation frameworks like SAARC and BIMSTEC.

What Are the Broader Economic and Political Implications?

For India, the restriction could yield near-term benefits for domestic textile manufacturers, particularly in West Bengal and the northeastern states, who often face price competition from cheap Bangladeshi garments. According to estimates cited by The Economic Times, Indian textile firms could gain business worth over ₹1,000 crore annually due to reduced competition in categories like denim jeans, kidswear, and knitwear.

However, the downside is that Indian consumers — especially in Tier II and III cities — may face rising prices for imported low-cost garments, school uniforms, and budget apparel that were previously sourced from Bangladesh. This inflationary effect could intensify ahead of festival seasons and school reopening cycles.

For Bangladesh, the export slowdown may lead to industrial layoffs in the textile and processing sectors, increased warehouse stockpiles, and reduced forex earnings. Exporters also warn that redirection of goods via sea ports will increase transit times by at least 10 to 15 days, which is a major disadvantage in the fast-fashion cycle where speed to market is crucial.

What Is the Response From Bangladesh and Trade Stakeholders?

Dhaka’s interim government has conveyed concern over the development and called for diplomatic consultations to resolve the trade impasse. Exporters’ associations in Bangladesh, including the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), have criticized the Indian decision as an “unwarranted disruption” of regional trade logistics. They’ve urged New Delhi to reconsider the curbs, especially for perishable and low-cost goods which are hard to reroute via sea efficiently.

Within India, voices from the trading community have expressed divided opinions. While domestic manufacturers welcome the move as a protective measure, some importers worry that long-term trade frictions with Bangladesh could disrupt regional supply chains, harm border economies, and undermine India’s “Neighborhood First” diplomatic policy.

Is This a Temporary Policy or the Start of a Structural Shift?

The Indian government has not indicated whether the May 17 directive is time-bound or permanent. Given the backdrop of recent geopolitical strains and economic recalibrations involving both countries, many trade watchers believe this could mark a structural pivot toward tighter bilateral controls — at least in sensitive categories like textiles and processed consumer goods.

Unless high-level talks between the two nations ease tensions, further escalations such as tit-for-tat tariffs or retaliatory restrictions by Dhaka cannot be ruled out. A prolonged impasse may also affect other collaborative initiatives, including regional energy grids, rail corridors, and climate-resilient infrastructure funding.

Where Does This Leave Regional Trade Stability in South Asia?

The India-Bangladesh trade disruption is a fresh reminder of the vulnerability of cross-border commerce to geopolitical tensions in South Asia. Despite robust historical, cultural, and economic ties, both nations have struggled to establish long-term trade mechanisms insulated from political shifts.

The restriction of land routes — once hailed as instruments of connectivity — now risks becoming symbols of strategic divergence. As South Asia continues to grapple with external influences from China, trade policy decisions such as this could shape the region’s future economic architecture.