India withdraws trans-shipment facility for Bangladesh
The Indian government has terminated the trans-shipment facility that allowed Bangladeshi export cargo destined for third countries to pass through Indian Land Customs Stations (LCSs) en route to ports and airports.
This decision, announced via a circular by the Central Board of Indirect Taxes and Customs (CBIC) on April 8, comes as a significant blow to Bangladesh's logistics and trade operations, reports Indian state-run news agency PTI.
The facility, which had been in place since June 2020, facilitated smooth trade flows for Bangladesh’s exports to neighbouring countries like Bhutan, Nepal, and Myanmar, leveraging India’s infrastructure.
The withdrawal of this facility is expected to disrupt Bangladesh’s export and import logistics significantly.
According to trade experts, Bangladeshi exporters will now face logistical delays, higher transportation costs, and increased uncertainty in managing their supply chains.
Ajay Srivastava, founder of the think tank Global Trade Research Initiative (GTRI), highlighted the implications of this decision. “The previous mechanism offered a streamlined route through India, cutting transit time and cost. Now, without it, Bangladeshi exporters may face logistical delays, higher costs, and uncertainty,” he said.
Additionally, landlocked nations such as Nepal and Bhutan, which rely heavily on Bangladesh for trade, are likely to raise concerns about restricted transit access, as this move could hamper their trade connectivity with Bangladesh.
This development comes at a challenging time when global trade dynamics are already under strain due to sweeping tariffs imposed by the United States on several countries, including India and Bangladesh. The added logistical hurdles are expected to further strain Bangladesh’s efforts to remain competitive in international markets.
The decision to rescind the trans-shipment facility was reportedly influenced by lobbying from Indian exporters, particularly in the apparel sector, who view Bangladesh as a major competitor.
Trade bodies like the Federation of Indian Export Organisations (FIEO) and the Apparel Export Promotion Council (AEPC) had urged the Indian government to withdraw the facility, citing capacity constraints at key cargo hubs like Delhi Air Cargo Complex.
FIEO Director General Ajay Sahai was happy with the move, saying, “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.” AEPC Chairman Sudhir Sekhri also echoed him.
Under World Trade Organization (WTO) rules, member countries are required to allow freedom of transit for goods moving to and from landlocked countries.
This includes ensuring that transit is unrestricted, free from unnecessary delays, and not subject to transit duties. Both India and Bangladesh are members of the Geneva-based organisation, raising questions about whether India’s decision aligns with its international obligations.
Ajay Srivastava pointed out, “As per WTO norms, India must ensure that its policies do not unduly restrict transit access for landlocked nations like Nepal and Bhutan. This withdrawal could lead to diplomatic tensions if these countries perceive their trade interests being compromised.”
For Bangladesh, the termination of the trans-shipment facility means finding alternative routes for its exports, which could increase costs and complicate logistics.
The country’s reliance on Indian infrastructure for third-country trade has been a critical component of its supply chain, especially for reaching markets in South Asia and beyond. Without this facility, Bangladeshi exporters may need to explore longer and costlier routes, potentially eroding their competitiveness in price-sensitive markets.
