India slams trade door on Bangladesh after ‘Chicken’s Neck’ row escalates

India‘s decision to abruptly revoke a key transshipment route for Bangladeshi exports to third countries via its land borders marks a significant shift in regional trade dynamics. On the surface, Indian authorities cited “delays and higher costs” linked to processing Bangladeshi shipments through land customs stations as the reason for withdrawing the facility. But beneath this administrative rationale lies a deeper geopolitical tension—particularly surrounding provocative comments by Bangladeshi interim leader Muhammad Yunus about the strategically critical ‘Chicken’s Neck’ corridor.

The transshipment order, originally granted in 2020, allowed Bangladeshi goods—mostly in sealed containers or trucks—to travel through Indian land borders to access ports or airports, facilitating trade with countries like Nepal, Bhutan, and Myanmar. The sudden reversal is expected to disrupt that flow and increase transport costs for Dhaka at a time when its export economy is already under severe strain from a 37% U.S. tariff on its goods.

How did Yunus’s Chicken’s Neck comments trigger a diplomatic backlash?

The timing of India’s policy reversal aligns closely with controversial remarks made by Chief Adviser Muhammad Yunus during a recent visit to China. Referring to India’s northeastern region as “landlocked,” Yunus implied that Bangladesh served as its “guardian of the ocean,” and framed Dhaka as a potential gateway for China’s trade ambitions into Northeast India. He appeared to position Bangladesh as a linchpin for Chinese connectivity into India’s vulnerable corridor—commonly known as the Chicken’s Neck, or the Siliguri Corridor.

This narrow, 22-kilometre-wide stretch of land in West Bengal connects the rest of India to its northeastern states. Surrounded by Bangladesh, Nepal, and Bhutan and located near the China border, the corridor has long been a security concern for Indian policymakers. Yunus’s framing of this geography, particularly while engaging with Beijing, was widely perceived in New Delhi as a direct provocation.

Reacting strongly, Assam Chief Minister Himanta Biswa Sarma labelled Yunus’s comments as “offensive and strongly condemnable.” He emphasized that these statements only reinforced the corridor’s strategic vulnerability and called for accelerated investment in alternative road and rail connectivity projects to bypass reliance on transit through Bangladesh. Former Manipur Chief Minister N. Biren Singh went further, warning that Bangladesh was attempting to turn India’s northeast into a “strategic pawn” for Chinese influence.

Against this backdrop, the termination of the transshipment route is being interpreted by trade analysts and regional observers as India’s diplomatic counterstroke—one that signals displeasure without formal sanctions, yet disrupts a key conduit in Bangladesh’s export logistics.

What impact will the transshipment ban have on Bangladesh’s exports?

While Bangladesh’s readymade garment exports—the backbone of its economy—are largely routed directly to global markets via sea, the now-defunct Indian land transshipment route had become critical for intra-regional trade. Goods traveling to landlocked Nepal and Bhutan, and even into parts of Myanmar, depended on India’s facilitation.

Traders like Yunus Hossain, based in Dhaka, have warned that the move could immediately halt exports to Nepal and Bhutan, as alternative corridors are underdeveloped or prohibitively expensive. For smaller exporters and manufacturers operating in the region, the increased logistical costs and longer delivery timelines could make cross-border trade commercially unviable.

Although Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association, acknowledged that the readymade garment sector has typically prioritised direct shipping over transshipment, she conceded that the facility was an important step toward enhancing intra-regional supply chain resilience. Its removal is seen as a regression in building South Asian trade linkages.

Is India’s explanation solely economic, or politically motivated?

Officially, India’s customs department justified the decision by pointing to operational inefficiencies, including delays and backlogs created at land customs stations due to transshipment processing. The Ministry of External Affairs echoed this rationale, stating that the change was driven by domestic export priorities and that transshipment routes involving Nepal and Bhutan remain open under other protocols.

But trade experts like Ajay Srivastava, founder of the Global Trade Research Initiative, argue that the timing and context suggest a deeper political calculation. India, he noted, is unlikely to tolerate perceived strategic provocations regarding its northeastern states, especially when articulated on international platforms like Yunus’s recent Chinese visit. Srivastava also raised questions about potential violations of World Trade Organization principles, including freedom of transit for landlocked countries.

Although Bangladesh is not landlocked, the transit of its exports to landlocked neighbours is indirectly affected, complicating the legalities but not softening the political signal India appears to be sending.

How does this decision intersect with U.S. tariffs and Bangladesh’s economic vulnerability?

The transshipment setback arrives just weeks after the United States implemented a steep 37% tariff on a range of Bangladeshi goods, citing reciprocal trade adjustments. The dual blow—loss of a regional trade route and rising Western tariffs—has escalated the pressure on Bangladesh’s export competitiveness, especially in sectors like textiles, footwear, and basic manufacturing.

Professor Selim Raihan of the University of Dhaka explained that although Bangladesh’s garment exports may weather the storm for now due to strong maritime links, the compounding nature of trade disruptions could erode profitability and increase vulnerability for smaller exporters. Raihan added that India’s move contradicts the broader objective of enhancing bilateral trade cooperation and undermines momentum built since the 2020 transshipment agreement.

Bangladesh’s commerce ministry has yet to issue a formal response, although trade bodies are reportedly preparing proposals to negotiate alternate corridors or request reconsideration. In parallel, there are growing calls within Dhaka to diversify export routes and strengthen maritime and air freight infrastructure to reduce over-reliance on Indian land links.

What lies ahead for regional connectivity and Indo-Bangladesh ties?

India’s revocation of the transshipment facility is more than a logistics matter—it underscores how quickly regional integration efforts can unravel under the weight of geopolitical tensions. With mutual trust shaken and trade links disrupted, future initiatives under regional frameworks like SAARC, BIMSTEC, or BBIN may struggle to gain traction unless both sides recalibrate their diplomatic approach.

For Bangladesh, the urgency to develop independent export infrastructure has never been greater. Strategically located between South Asia and Southeast Asia, the country must now navigate a more precarious regional landscape where goodwill is contingent on political alignment.

India, meanwhile, is sending a message that it will aggressively protect its core strategic interests, particularly around the Chicken’s Neck corridor. As regional competition intensifies, especially with China’s growing footprint, India appears unwilling to tolerate what it perceives as strategic posturing from its smaller neighbours—even when dressed in the language of trade.

In that context, the cancellation of the transshipment facility may not just be about logistics—it may be a prelude to a more assertive Indian policy posture across South Asia.