The Indian government has terminated the trans-shipment facility that allowed export cargo from Bangladesh to third countries like Bhutan, Nepal, and Myanmar using Indian land customs stations to ports and airports.

WHAT IS THE FACILITY?

Bangladesh is sorrounded by India from all the sides except it's south where if borders Bay of Bengal. Therefore India had allowed trans shipment facilities to Bangladesh in 2020 in which it could use India’s land borders to move it’s goods to Delhi and then to Europe and other countries. Through India’s land, Bangladesh has also been exporting to Nepal, Bhutan and Myanmar. (see map) 

WHY INDIA WITHDREW?

But now this facility to Bangladesh has been withdrawn. Indian exporters have been advocating for the withdrawal of the transshipment facility because both Bangladesh and India are competitors in the textile export sector and due to the Bangladesh’s exports through Indian airports, Indian airports were getting congested.

Due to the red sea crisis, the sea transport was getting riskier and therefore there has been alreeady an increase in the air cargo and it was further getting congested with Bangladesh’s shipments.

Under the facility given to Bangladesh, almost 20-30 loaded trucks arrived in Delhi every day, which slows down the smooth movement of Indian cargo and airlines also charge huge amounts for the transportation.

IMPACTS?

This move could impact the shipment of Bangladesh's readymade garments through Indian airports, particularly Indira Gandhi International Airport in New Delhi, as a significant portion of these exports is routed through India. This move would also affect Bangladesh’s trade with Nepal, Bhutan and Myanmar. The transshipment arrangement used to reduce goods transit time and costs for Bangladesh but now they will have to face higher costs.

Indian government may have addressed many challenges with this decision. One, this gives a message to Bangladesh that an enmity with India for no reason would cost heavy economically. Then stopping Bangladeshi trucks would also reduce the infiltration of Rohingyas and Bangladeshis to India. India’s other neighbours would also understand the value of good relations with India.