New Delhi:Â The Indian government has officially terminated the trans-shipment facility that permitted export cargo from Bangladesh to third countries via Indian land customs stations, as outlined in a recent government circular.
Indian apparel exporters had previously urged the government to revoke this facility, which had facilitated smoother trade routes for Bangladesh’s exports to nations such as Bhutan, Nepal, and Myanmar. This arrangement was first established by India for Bangladesh in June 2020.
Global brands, including Zara, which relied on this route to fulfill international demands, will need to reassess their sourcing strategies. According to a customs circular issued on Tuesday, cargo that has already entered India can still be shipped out, but the phasing out of the facility is expected to disrupt established trade practices.
“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,” stated the Central Board of Indirect Taxes and Customs in a circular dated April 8.
This decision comes at a time when the U.S. has imposed extensive tariffs on several countries, including India and Bangladesh.
The prior circular allowed the transshipment of Bangladesh’s export cargo to third countries using Indian land customs stations en route to Indian ports and airports. Experts believe that this decision will benefit various Indian exporting sectors, including apparel, footwear, and gems and jewellery.
Bangladesh has been a significant competitor to India in the textile industry.
“Now we will have more air capacity for our cargo. In the past, exporters have complained about limited space due to the transshipment facility given to Bangladesh,” stated Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO).
The Apparel Export Promotion Council (AEPC) had previously requested the government to suspend the order allowing Bangladesh’s export cargo to transship through the Delhi air cargo complex. AEPC chairman Sudhir Sekhri noted that 20-30 loaded trucks arrive in Delhi daily, hindering the smooth movement of cargo and allowing airlines to exploit the situation. This has resulted in soaring air freight rates, delays in handling and processing export cargo, and severe congestion at Indira Gandhi International Airport in Delhi, making Indian apparel exports through this complex uncompetitive.
“This will help rationalize freight rates, reducing transportation costs for Indian exporters while decongesting airports, leading to shorter transit times for shipping goods,” remarked Mithileshwar Thakur, AEPC Secretary General.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), indicated that the withdrawal of this facility may disrupt Bangladesh’s export and import logistics, which rely on Indian infrastructure for third-country trade.
“The previous mechanism provided a streamlined route through India, cutting down transit time and costs. Now, without it, Bangladeshi exporters might encounter logistical delays, increased costs, and uncertainty. Additionally, landlocked nations like Nepal and Bhutan may raise concerns about limited transit access to Bangladesh, especially since this move will hinder their trade with the country,” Srivastava stated.
He suggested that Bangladesh’s plans to establish a strategic base near the Chicken’s Neck area with China’s assistance might have influenced this decision.
For over two decades, India has consistently supported Bangladesh by offering one-way zero-tariff access to Bangladeshi goods (excluding alcohol and cigarettes) in the extensive Indian market.
In the fiscal year 2023-24, India-Bangladesh trade reached a total of $12.9 billion. With recent policy changes, the landscape of India-Bangladesh export trade changes will likely lead to shifts in competitive dynamics between the two nations in the textile sector.
