India’s decision to rescind the transshipment facility granted to Bangladesh represents not only a significant policy shift but also a calculated geopolitical message amid simmering tensions over regional influence and connectivity. The facility, originally introduced in 2020, allowed Bangladeshi export cargo to transit through Indian land customs stations (LCSs), ports, and airports en route to third countries. This arrangement had been seen as a goodwill measure to facilitate trade cooperation and enhance regional economic integration. However, as of April 8, 2025, that facility has been formally withdrawn, signaling a clear recalibration of India’s posture toward Dhaka, especially in light of recent remarks made by Bangladesh’s interim Chief Adviser, Muhammad Yunus.
The Ministry of External Affairs, in its statement, attributed the withdrawal to growing logistical challenges faced by Indian exporters. Indian ports and airports, it said, had been witnessing increased congestion, longer turnaround times, and higher operational costs due to the rising volume of Bangladeshi cargo using Indian infrastructure for global shipments. These challenges were creating bottlenecks and reducing the competitiveness of India’s own exports in global markets. The decision, it said, was taken after a careful review of the situation, and it emphasized that Bangladeshi exports destined for Nepal or Bhutan transiting through India would remain unaffected — an important distinction that suggests India’s focus is primarily on third-country export competition and broader diplomatic dynamics.
While the reasoning is economic on the surface, the context surrounding the move points strongly to political undercurrents. Just days prior to the announcement, Muhammad Yunus, during a high-profile four-day visit to China, made a series of remarks that sparked outrage in Indian diplomatic circles. Referring to India’s Northeast as a “landlocked” region with “no access to the ocean,” Yunus presented Bangladesh as the sole maritime lifeline for the Seven Sister states. He further invited China to expand its economic footprint into Bangladesh and suggested that Northeast India could become a natural extension of the Chinese economy — statements seen in New Delhi as a clear attempt to realign regional alliances and challenge India’s strategic positioning in the Indo-Pacific.
In response, India’s External Affairs Minister S. Jaishankar issued a strong and pointed rebuttal, defending India’s territorial and strategic integrity. He highlighted that India possesses the longest coastline in the Bay of Bengal — over 6,500 kilometers — and plays a central role in connecting the BIMSTEC and ASEAN regions. Jaishankar also emphasized that the Indian Northeast is not isolated, but rather undergoing a transformation into a major connectivity hub through multi-modal investments in rail, road, waterways, and energy infrastructure. India, he said, believes in inclusive regional cooperation rather than selective engagement or dependency on external powers.
Trade experts are already speculating about the economic consequences of the rollback. Bangladesh is a strong global player in textiles, garments, footwear, and light manufacturing — sectors where it competes directly with Indian exporters. By revoking preferential transshipment access, Indian producers in these industries are expected to regain some lost ground, as Bangladeshi goods may now face higher transportation costs and longer shipping timelines. Some analysts see this move as part of a broader strategy to protect and promote domestic industries, especially as India seeks to boost its global exports under initiatives like Make in India and PLI (Production Linked Incentive) schemes.
At the same time, the move is being read as a strategic warning to Bangladesh’s interim leadership, reminding Dhaka of India’s importance as a trade partner and transit ally. It signals that strategic alignment with powers like China — especially at India’s expense — may carry diplomatic and economic repercussions. India’s calibrated response also reflects a desire to assert control over its regional narrative and counterbalance China’s growing influence in South Asia, particularly in countries like Bangladesh, Sri Lanka, Nepal, and the Maldives.
In conclusion, the rollback of the transshipment facility is not just a trade policy decision — it is a strategic recalibration, rooted in a broader geopolitical contest in South Asia. It underscores India’s intention to defend its regional interests, assert its maritime and economic sovereignty, and push back against external narratives that seek to undermine its strategic depth in the Northeast. With regional dynamics in flux and global attention increasingly shifting to the Indo-Pacific, India’s move is both a signal and a stance — firm, calculated, and deeply layered.
