In a significant geopolitical and economic move, India has withdrawn the transshipment facility granted to Bangladesh, effectively halting the movement of Bangladeshi cargo through Indian territory. The decision, which came into force around April 9, was announced shortly after the visit of Bangladesh's interim Chief Adviser Mohammad Yunus to China, where he made anti-India remarks. This development has far-reaching implications not just for India-Bangladesh bilateral relations, but for the entire regional trade ecosystem.

Official reason and underlying diplomatic tension

India's Ministry of External Affairs cited logistical issues, stating the move was due to congestion at Indian ports, and a need to prioritize domestic exports. However, analysts and strategic commentators note the timing of the decision closely follows Yunus’ provocative statements during his March 26–29 China visit, where he allegedly aligned Bangladesh's interests with China and Pakistan, fueling anti-India rhetoric. This has been widely perceived in New Delhi as a deliberate geopolitical snub.

Transshipment facility: Economic lifeline for Bangladesh

The transshipment route through Petrapole land port had become a critical conduit for Bangladesh's export-oriented industries, especially ready-made garments (RMG). In FY 2023-24, around 4,000 trucks used this route to access international ports via India, carrying goods valued at approximately Rs 3,500 crore. FY 2024-25 had already seen a 40% increase in traffic before the sudden halt.

The termination now leaves Bangladesh’s RMG sector in disarray, compounded by other external shocks like the Red Sea supply disruptions, the Ukraine conflict, and suspended US reciprocal tariffs. These factors already strained the sector’s access to European and North American markets, and now the loss of the Indian route creates a logistical crisis.

India's strategic gain: Sectors to benefit

Trade experts indicate that the withdrawal of transshipment facilities may offer relief to Indian sectors such as apparel, footwear, and gems and jewellery, where Bangladesh has been a stiff competitor. With Bangladesh’s export pipeline disrupted, Indian manufacturers could gain market share in Europe and beyond.

RSS raises concern over Bangladesh's internal developments

India’s decision is also seen in light of repeated warnings by organisations like the Rashtriya Swayamsevak Sangh (RSS). In a March 2024 resolution, the RSS voiced concerns over the rise of radical Islamist elements in Bangladesh, reportedly fostered and protected by the Yunus administration. The resolution highlighted targeted violence against Hindu and minority communities, terming it an institutionalised pattern backed by state support.

The RSS warned that such internal instability and anti-India sentiment could jeopardise the historic cultural and strategic ties between the two nations.

Regional impact: BBIN and BIMSTEC at risk

The fallout extends beyond bilateral issues. The Observer Research Foundation (ORF), a leading Indian think tank, warns that India’s decision could derail progress on multilateral frameworks like the Bangladesh-Bhutan-India-Nepal (BBIN) Corridor, which had seen steady traction since 2021. The corridor is central to enhancing intra-regional trade in South Asia, a region already lagging in economic integration with just 5% intra-regional trade, compared to ASEAN’s 25% and EU’s 60-65%.

Moreover, BIMSTEC’s Master Plan for Connectivity, which targets investments worth US$124 billion in 250+ regional projects, is also threatened. Reduced cooperation between India and Bangladesh can hamper energy, transport, and economic connectivity plans under this initiative.

Political fallout: India’s shared legacy under threat

The broader worry within India is the erosion of its historic ties and shared legacy with Bangladesh. The RSS resolution called for international relations scholars and policymakers to remain vigilant against efforts by international forces to foment instability in the region. It emphasised the deep-rooted social and cultural bonds in South Asia and warned that disruption in any one nation’s stability could reverberate across borders.

Yunus’ alignment with anti-India powers is increasingly seen as a strategic miscalculation that has triggered a sharp reaction from India, both diplomatically and economically.

Conclusion: A tense road ahead for bilateral and regional ties

The cancellation of the transshipment facility is more than a policy shift—it signals a dramatic low in India-Bangladesh relations under the current Bangladeshi interim leadership. The situation serves as a cautionary tale of how political rhetoric and foreign policy alignments can have tangible economic consequences.

While India seeks to protect its strategic interests, the onus now lies on Bangladesh to recalibrate its regional diplomacy, rebuild trust, and ensure that shared economic and cultural legacies are preserved, for the sake of stability and prosperity in South Asia.

The coming months will reveal whether pragmatism can override provocation—or if the rift deepens further, affecting not just bilateral trade but the future of regional cooperation.

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