India pulls plug on Bangladesh cargo transit days after Yunus' 'landlocked Northeast' jab in China

The announcement coincides with the United States imposing fresh tariffs on a number of countries, including India and Bangladesh.

In a significant move affecting regional trade logistics, the Indian government has withdrawn the trans-shipment facility that allowed export cargo from Bangladesh to third countries using Indian land customs stations, according to a government circular.

The facility, introduced in June 2020, enabled Bangladesh to send export consignments to countries like Bhutan, Nepal, and Myanmar via Indian ports and airports.

Notably, the decision comes just days after Bangladesh's Chief Adviser Muhammad Yunus, said in China that India's Northeast as "landlocked" and positioned Bangladesh as the "guardian of ocean access" for the region, However, it is not clear whether the move was in direct retaliation to Yunus' remarks. The decision to terminate the arrangement comes amid pressure from Indian exporters, particularly in the apparel sector, who had urged the government to revoke the provision, PTI reported.

"It has been decided to rescind... circular...dated June 29, 2020, as amended with immediate effect. Cargo already entered into India may be allowed to exit the Indian territory as per the procedure given in that circular," the Central Board of Indirect Taxes and Customs (CBIC) stated in its circular dated April 8.

The announcement coincides with the United States imposing fresh tariffs on a number of countries, including India and Bangladesh.

According to PTI, trade experts believe the move will benefit Indian sectors such as apparel, footwear, and gems and jewellery — industries where Bangladesh has been a strong competitor.

"Now we will have more air capacity for our cargo. In the past, exporters have complained about lesser space due to the trans-shipment facility given to Bangladesh," said Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), to PTI.

The Apparel Export Promotion Council (AEPC) had earlier flagged concerns over the facility, particularly the use of the Delhi Air Cargo complex for Bangladesh’s outbound shipments. AEPC Chairman Sudhir Sekhri told PTI that nearly 20–30 loaded trucks from Bangladesh arrived in Delhi daily, causing delays, congestion, and higher air freight rates. This, in turn, made Indian apparel exports through the Delhi air cargo terminal less competitive.

Ajay Srivastava, founder of the think tank Global Trade Research Initiative (GTRI), told PTI that the decision is likely to disrupt Bangladesh’s third-country trade logistics, which rely heavily on Indian infrastructure.

“The previous mechanism had offered a streamlined route through India, cutting transit time and cost. Now, without it, Bangladeshi exporters may face logistical delays, higher costs, and uncertainty,” Srivastava said.

He also pointed out that landlocked nations like Nepal and Bhutan — which rely on this corridor for trade with Bangladesh — may raise concerns over restricted transit access.

Under World Trade Organisation (WTO) rules, of which both India and Bangladesh are members, member countries are required to ensure freedom of transit for goods moving to and from landlocked countries, without unnecessary delays or duties.