India tightens Bangladesh imports as Dhaka moves closer to China

By Admin

27 May, 2025

India has imposed sweeping restrictions on imports from Bangladesh, escalating economic tensions and reflecting deeper geopolitical shifts in South Asia. The move, effective from 17 May 2025 under Notification No. 07/2025 26 issued by the Directorate General of Foreign Trade (DGFT), directly impacts goods worth Rs 6,400 crore (USD 770 million) annually    approximately 42% of India’s total imports from its eastern neighbour.

Major Blow to Bangladesh’s Garment Industry

The brunt of these restrictions falls on Bangladesh’s ready made garment (RMG) industry. Between April 2024 and February 2025, Bangladesh exported garments worth Rs 5,140 crore (USD 618 million) to India. Going forward, these exports will be allowed entry only through two designated Indian seaports    Nhava Sheva and Kolkata. This policy effectively cuts off land based trade routes, previously vital for the flow of goods, creating logistical bottlenecks and affecting the cost competitiveness of Bangladeshi products.

Curbs on Key Commodities

The restrictions extend beyond garments. Processed foods, carbonated beverages, cotton waste, plastic items, and wooden furniture  worth a total of Rs 1,270 crore (USD 153 million)    can no longer enter India through northeastern land ports or key transit points in West Bengal such as Changrabandha and Fulbari. However, certain essential goods, including fish, LPG, edible oil, and crushed stone, are exempt from the new regulations to ensure continued access to critical supplies.

A Tit for Tat Trade Policy?

This move by New Delhi is widely seen as a response to Bangladesh’s recent protectionist measures. Dhaka has tightened its grip on Indian exports by banning yarn imports through five major land ports, restricting rice imports, and barring goods like paper, tobacco, fish, and powdered milk. Adding to the strain, Bangladesh imposed a new transit fee of 1.8 taka per tonne per kilometre on Indian cargo transiting through its territory.

India’s Domestic Textile Industry Pushes Back

Indian textile manufacturers have long voiced their frustration over what they describe as an “unfair playing field.” While Indian firms pay 5% GST on domestically sourced fabric, Bangladeshi exporters enjoy duty free access to Chinese fabric and benefit from government backed subsidies. This grants them a 10–15% pricing advantage in the Indian market, prompting calls for corrective action from Indian industry bodies.

Rising Chinese Influence: A Geopolitical Undertone

The trade restrictions come against the backdrop of a shifting geopolitical alignment. Bangladesh’s interim government under Muhammad Yunus has been strengthening ties with China. In March 2025, Bangladesh secured USD 2.1 billion in Chinese investments during a visit to Beijing. Projects like the Teesta River development further solidify Beijing’s growing presence in Bangladesh, raising strategic concerns in New Delhi about China’s expanding influence in India’s backyard.

Room for Dialogue Amid Rising Tensions

Despite the current strain, experts suggest there is still room for reconciliation. A report by the Global Trade Research Initiative (GTRI) points out that the cultural, historical, and economic ties between India and Bangladesh remain strong and could form the basis for renewed dialogue. As a regional leader, India faces the dual challenge of asserting its economic interests while fostering diplomatic engagement to ensure long term stability in South Asia.

Conclusion

India’s latest move to restrict imports from Bangladesh is more than a trade issue    it reflects a broader realignment of regional politics and economic strategy. While the measures are aimed at addressing market imbalances and countering Bangladesh’s policy shifts, the underlying geopolitical dynamics    especially the growing China Bangladesh relationship cannot be ignored. The coming months will test both countries' ability to manage conflict, preserve cooperation, and maintain the fragile balance of power in the region.