For years, businesses in India and Bangladesh have depended on each other — not just through handshakes at the top, but through the daily movement of trucks, containers, cargo flights, and shipping vessels. Now, that quiet but critical rhythm is under threat.
The current standoff began last month when Bangladesh restricted cotton yarn imports from India via land routes — a move aimed at shielding its domestic textile industry. While the policy might seem surgical, it struck at the core of a multi-billion-dollar supply chain that powers Bangladesh’s $38 billion garment export industry.
India exported $1.6 billion worth of cotton yarn to Bangladesh in 2024, with nearly a third transported overland. That route is now effectively sealed.
In a swift counter, India suspended a vital transshipment arrangement that allowed Bangladeshi-made apparel — destined for brands like Zara — to be transported by road to Indian airports for airlifting to global markets. Citing “congestion,” New Delhi halted the corridor, causing immediate delays and cost spikes.
“The India route got cargo to Western countries in a week. By sea, it takes up to eight,” said Anis Ahmed, CEO of logistics firm MGH Group, which handles exports for major fashion retailers.
Over $1 billion worth of apparel moved through that land-air corridor each year — a lifeline for an industry racing against fast fashion timelines. With Bangladesh’s limited air freight capacity and under-equipped airports, losing this corridor puts extreme pressure on rerouting options, which are slower and more expensive.
Industry experts warn that the disruption could erode Bangladesh’s edge in the global apparel market. Speed to market is non-negotiable for global buyers — and delays can mean lost contracts.
Meanwhile, India’s northeastern states — already logistically constrained and reliant on narrow internal corridors — are feeling the tremors. These landlocked states depend on Bangladeshi transit routes, including access to ports and inland waterways, as part of India’s ‘Act East’ strategy. Dhaka, however, has hinted at reviewing these transit concessions, originally championed by former PM Sheikh Hasina — now living in exile in India.
“Any disruption to these corridors won’t just dent bilateral trade — it will stretch already fragile domestic supply chains in India’s northeast,” noted a senior logistics analyst in Delhi.
The geopolitical undertones are hard to miss. Interim Bangladeshi leader Muhammad Yunus recently suggested Bangladesh could act as a gateway to China for India’s northeast — a remark that stirred strategic unease in New Delhi. With the vulnerable Siliguri Corridor — India’s only land link to its northeast — already a known chokepoint, the stakes are rising.
Rhetoric on both sides is heating up. Anti-India sentiment is growing in Bangladesh, while some Indian voices are calling for import curbs on Bangladeshi garments. Industry stakeholders, however, are urging restraint.
“Supply chains don’t operate in silos,” said economist Debapriya Bhattacharya from Dhaka. “Disruptions like these destabilize entire value networks that took years to build.”
If tensions escalate further, businesses fear a domino effect — disrupting trade not only in garments and yarn but also in pharmaceuticals, perishables, and more. It’s a sobering reminder that in today’s hyper-connected economy, diplomacy and supply chains are two sides of the same coin.
