Bangladesh dollar trade to be hit by India’s port restrictions, may lose $770 million
New Delhi: India’s decision to impose port restrictions on Bangladeshi goods may hurt Dhaka’s dollar-earning trade, especially in garments and processed goods, at a time when the country is already navigating a tricky economic and geopolitical shift.
New Delhi’s tightening of the screws may restrict Bangladeshi exports worth $770 million to India—nearly 42% of the neighbouring country’s global export earnings—by barring several goods from land routes and limiting them to a few seaports.
India’s move, which affects major goods like readymade garments, processed food and plastics, comes against the backdrop of a dip in ties with Dhaka, and its series of recent trade restrictions targeting Indian exports.
The biggest blow would be to Bangladesh’s main export, garments, which earned $618 million from India between April 2024 to February 2025, the Global Trade Research Initiative (GTRI), a trade think tank, said on Sunday.
India will now allow such shipments only through the seaports of Nhava Sheva and Kolkata, cutting off the overland trade route that had long supported Bangladesh, according to a notification issued on 17 May by the Directorate General of Foreign Trade (DGFT).
The Indian step will mean Bangladeshi exporters having to send their goods by sea, which will add to their costs.
Several other goods, including flavoured drinks, plastic items, cotton waste and wooden furniture—worth about $153 million—have also been blocked from entering India via land routes, especially through West Bengal and the north-eastern states.
However, India will continue to allow Bangldeshi fish, edible oils, liquefied petroleum gas and crushed stone to enter from the land route. In addition, exports of Bangladeshi goods to Nepal and Bhutan, which transit through India, will also remain unaffected.
The Indian move follows Bangladesh’s restrictions on Indian exports. These include a ban on yarn through five land ports, curbs on rice, and limits on items like paper, tobacco and milk powder, said Ajay Srivastava, co-founder of GTRI.
Dhaka has also introduced a transit fee on Indian cargo passing through its territory, ending years of zero-fee movement under regional cooperation frameworks.
For Indian exporters already facing delays, inspections and market barriers, the port restrictions appear to be a calculated response, Srivastava said.
Indian textile manufacturers have long raised concerns about unfair competition. While Indian firms pay a 5% goods and sales tax on locally sourced fabric, Bangladeshi exporters benefit from duty-free Chinese fabric and export incentives, allowing them to undercut Indian prices by 10-15%, according to the GTRI report.
With top global retailers such as H&M, Zara, Primark, Uniqlo and Walmart sourcing from Bangladesh, some of that stock finds its way into the Indian market, hurting domestic manufacturers.
Ties have nosedived since the fall of Sheikh Hasina’s pro-India government amid violent disturbances in mid-2024, prompting her to flee to India. Dhaka has moved closer to China, with interim Prime Minister Muhammad Yunus signing deals worth $2.1 billion during a visit to Beijing in March.
China has since taken up sensitive projects like Teesta river development, an area of longstanding India-Bangladesh cooperation, raising concerns in New Delhi over China’s role in the region.
“While Bangladesh has not openly supported Pakistan during the recent India-Pakistan escalation, its silence and growing tilt towards China are being watched closely in Indian policy circles,” said Abhash Kumar, trade expert and assistant professor of economics at Delhi University.
“The latest trade curbs are not being seen in isolation but as part of a broader strategic recalibration, where India is using economic levers to signal its discontent,” Kumar added
Despite the current tensions between India and Bangladesh, experts believe the relationship is not beyond repair. Bangladesh remains India’s largest trading partner in South Asia, and both countries have gained from years of connectivity and cooperat
Commerce ministry data shows that bilateral trade between the two nations stood at $14.24 billion in 2022-23, with $12.22 billion in exports and $2.02 billion in imports. In FY24, total trade fell to $12.91 billion, with exports at $11.07 billion and imports at $1.85 billion.
In FY25, up to February, India exported goods worth $10.40 billion to Bangladesh and imported $1.83 billion, bringing total trade during the period to $12.23 billion.
Mint reported on 9 April that India had withdrawn a key transit facility that allowed Bangladesh to move export cargo through Indian territory to third countries, amid rising global trade tensions following US President Donald Trump's reciprocal tariffs announcement on 2 April. That move disrupted a system that had enabled Bangladesh to send exports to neighbouring countries quickly and at low cost for years.
