Opinion From Covid solidarity to strategic pullback: The rise and fall of India-Bangladesh transshipment ties
In a world reshaped by rising trade uncertainty because of Donald Trump’s tariffs, Bangladesh risks losing its export edge without urgent infrastructure upgrades. Strengthening regional ties with India and Southeast Asia is not just wise — it’s essential for sustaining its growth as a developing nation
India’s ports and airports helped Bangladesh gain confidence during the devastating pandemic. (File Photo) India recently withdrew permission to Bangladesh for their third-country exports using Indian ports and airports, an arrangement agreed upon in 2020. There has been quite an uproar, particularly in Bangladesh. Many even went to the extent of calling for a tit-for-tat move.
Let’s first look at why and when this transhipment permission was brought into the picture. India extended this facility to Bangladesh at a time when all of South Asia was heavily affected by Covid-19. Bangladesh, too, was devastated by the pandemic, and the country’s garment manufacturers were receiving orders for health gear such as masks, medical cloth and hand gloves, among other items. Because of flight and shipping restrictions, Bangladesh approached India. This was the origin of the journey that has now proved to be short-lived.
To be specific, India allowed Bangladesh to use its Land Customs Stations (LCSs) and Integrated Check Posts (ICPs) for the transhipment of export cargo. This was a humanitarian gesture towards Bangladesh, helping it meet the rising export orders of ready-made garments (RMG). Indeed, India’s ports and airports helped Bangladesh gain confidence during the devastating pandemic. The land border kept operating as usual, including the significant Petrapole-Benapole border.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh is one of the few countries that witnessed higher global exports, including RMG, during the pandemic. For example, Bangladesh’s exports in 2019-20 were $33.67 billion, of which the RMG exports were $27.95 billion. In 2020-21, Bangladesh’s global exports increased to $38.79 billion, and the volume of RMG exports increased to $31.46 billion. The trend continued thereafter. In 2021-22, this figure jumped to $52.08 billion, of which RMG exports were $42.61 billion, a massive 35 per cent rise.
Additionally, the BGMEA’s records reveal that Bangladesh’s garment industry has transshipped more than 34,900 tonnes of apparel products, worth $462.34 million, through India to 36 countries from January 2024 to March 2025. Most were destined for the United States, the European Union, the United Arab Emirates, Australia, etc. As most global demands cannot afford ocean shipping, a faster and bigger cargo terminal became the way forward.
Bangladesh has over 35 years of experience in apparel manufacturing, and with over 4,000 factories, it serves all major global fashion brands today. The Dhaka-Delhi multi-modal cargo route provided a significant advantage to Bangladesh to fulfil global orders at a lower cost and with timely deliveries. Sportswear giants like Decathlon and global garment brands such as Zara, H&M, Gucci, etc., used the Dhaka-Delhi trade route to meet international demand. Japanese retail chains such as UNIQLO, along with India’s Reliance, Aditya Birla Group, etc., use the same route for the import of Bangladeshi cotton apparel. This arrangement, therefore, was a noteworthy achievement in the India-Bangladesh ties.
Bangladesh’s export infrastructure is highly constrained in capacity. The Dhaka International Airport is the only major air export zone, and the Chattogram port is for ocean shipment. The Pangaon International Container Terminal at Dhaka started handling international cargo shipments but on a limited scale. Mongla and Ashuganj ports, though both on the Indo-Bangladesh Protocol Route (IBPR), mostly handle import shipments other than RMG. The cargo terminal at the new airport in Dhaka is not yet operational.
On the other hand, the cargo facility at Delhi Airport is well connected with Bangladesh through rail and road via Kolkata. It is located across 150 acres comprising state-of-the-art infrastructure, two integrated cargo terminals, an on-airport logistics centre, and the largest airline network connecting 67 international and 79 domestic destinations, served by 65-plus air carriers and 20-plus freighter airlines. India extended this advanced infrastructure to Bangladesh despite domestic opposition. Delhi’s air cargo terminal later set up the “Transhipment Excellence Centre” (TEC), providing seamless and efficient transhipment services for the shipments. The facility resulted in significant congestion at the cargo terminals. Still, India provided it without charging any fee and absorbed all environmental costs as a gesture of goodwill.
Therefore, on April 8, when India rescinded the 2020 agreement, it will impact not only Bangladesh’s third-country trade in terms of cost and time but also bilateral relations. The supply chain disruption occurs against the background of disruptions in the Red Sea. Attacks on vessels have forced many Indian and Bangladeshi ships to reroute around the Cape of Good Hope, increasing travel times and costs.
Bangladesh is aiming for a $1 trillion economy by 2031. India’s post-liberalisation experience suggests that the perennial infrastructure deficit must be removed, failing which Bangladesh’s elevation will be unsustainable. Therefore, it has to build its own air cargo infrastructure. The global garment brands will have to rework their sourcing strategy.
In view of the increasingly uncertain global trade order induced by Donald Trump’s tariff regime, if Bangladesh fails to improve its trade infrastructure and quality, it may lose its global standing in exports — not only RMG but also other products like pharmaceuticals, leather-made items, processed foods, etc. Today, Bangladesh needs faster airports and seaports. The cargo terminal at the upcoming deep sea port at Matarbari will be operational in 2027. In a silted Bay of Bengal coast, Bangladesh has limited options. Bangladesh’s elevation to the developing world demands a peaceful co-existence with neighbours. It would be wiser for Bangladesh to deepen its regional integration with India and the rest of South and Southeast Asia.
The writer is professor, Research and Information System for Developing Countries (RIS), New Delhi. Views are personal
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