Explained: How Bangladesh is hurting itself by curbing Indian exports

India Today

20-05-2025

India's decision to restrict imports from Bangladesh through land ports has drawn sharp attention, but according to a trade expert, it's not a provocation. It's a measured response to Dhaka's growing list of curbs on Indian goods.In an interview with Business Today, Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), said Bangladesh's restrictive trade policies are not only straining bilateral ties, but also undermining its own economic interests.advertisementHe calls India's move a 'teaser'—a signal rather than a full-scale retaliation.'INFLICTING DAMAGE ON THEMSELVES'Highlighting Bangladesh's import restrictions on Indian staples like yarn and rice, alongside increased inspection scrutiny at its borders, Srivastava said, 'Bangladesh is inflicting damage on themselves. They cannot do anything to India."India's decision affects over $770 million worth of imports, roughly about 42% of all goods shipped from Bangladesh. Ready-made garments alone made up $660 million last year. Those will now only be allowed through Kolkata and Nhava Sheva ports, effectively shutting land routes via the Northeast.'These are big brands—H&M, Zara. They make in Bangladesh and export worldwide. Now, they can't use Indian land ports. Everything must come by sea,' Srivastava said.However, Srivastava said Bangladesh's increasingly hostile trade posture is rooted in political rather than economic motives.advertisement'Bangladesh was diversifying beyond garments into sectors like leather. But since the last power shake-up, religious elements have taken over. They've taken a hardline stance against India,' he said. 'Without any provocation, they started blocking Indian goods—rice, yarn, even FMCG.'India, instead of retaliating with bans, opted for a soft signal: nothing is blocked, but key categories must now use more expensive and slower sea routes. 'That's the teaser,' Srivastava said. "We haven't blocked their goods. We've just changed the entry point.'Srivastava noted that Bangladesh's recent graduation from Least Developed Country (LDC) status means it can no longer expect tariff-free access by default. 'India had given them zero-duty access under LDC norms. That needs to be reviewed now, just like Europe and the US are doing.''They are under serious pressure. The LDC graduation means they lose access, and their own policies are making things worse. They're damaging themselves,' he added.On speculation that Chinese goods are being routed into India via Bangladesh, Srivastava downplayed the risk.'There's no large-scale trans-shipment. Legally, it's not allowed. Maybe at a small scale. But mainly, they import fabric from China, make garments, and export,' he said.STRAINED TIESRelations between New Delhi and Dhaka have worsened under Prime Minister Muhammad Yunus, especially after his recent remarks in Beijing. Yunus described India's Northeast as 'landlocked' and called Bangladesh the 'guardian of the ocean' in the region.advertisementIndian officials said the trade curbs are designed to ensure fairness. While India allowed Bangladesh full access through land and seaports, Dhaka has blocked Indian exports selectively, especially those headed to the Northeast.The new Indian rules block entry of Bangladeshi plastics, processed foods, furniture, drinks and cotton yarn through land ports in Assam, Tripura, Meghalaya, Mizoram and parts of Bengal. These come weeks after India scrapped a five-year arrangement that let Bangladesh transport goods to third countries via Indian airports and ports.'This is a reciprocal move,' a government official told PTI, pointing to Dhaka's tightening of inspections on Indian goods and selective import bans.Must Watch