India has imposed significant restrictions on imports from Bangladesh, targeting nearly 42% of bilateral imports-valued at approximately $770 million-as a direct response to escalating diplomatic and trade tensions following Dhaka's growing alignment with China.

The new measures, announced in May 2025, limit key Bangladeshi exports such as ready-made garments, processed foods, and plastic goods to just two Indian seaports: Kolkata and Nhava Sheva. 

This effectively bans these goods from entering India via the land routes that have historically been crucial for cross-border trade, particularly with India’s north-eastern states.

The Global Trade Research Initiative (GTRI) report underscores that these restrictions are not isolated economic measures but are retaliatory in nature, responding to Bangladesh’s recent trade barriers against Indian exports and a marked diplomatic shift towards China.

Since late 2024, Bangladesh has imposed a series of restrictions on Indian goods, including bans on yarn, rice, paper, tobacco, fish, and powdered milk, as well as the introduction of a transit fee on Indian goods passing through its territory. These cumulative actions have strained bilateral trade, with Indian exporters facing operational delays and tighter inspections.

Diplomatic friction intensified after Bangladesh’s interim chief adviser, Muhammad Yunus, made controversial remarks in China, describing India’s north-eastern states as "landlocked with no access to the ocean," a statement viewed by Indian officials as undermining the region’s connectivity.

Yunus’s visit to China in March 2025 resulted in $2.1 billion in Chinese investments and cooperation agreements, signalling a deepening of Dhaka’s ties with Beijing following the fall of Sheikh Hasina’s pro-India government in mid-2024. China’s support includes extending zero-tariff facilities to Bangladeshi goods and proposing negotiations for a free trade agreement, further cementing the strategic partnership.

Indian industry, particularly textile manufacturers, has long expressed concerns over what they perceive as unfair advantages enjoyed by Bangladeshi exporters, who benefit from duty-free Chinese fabrics and generous export subsidies, allowing them to undercut Indian prices by 10–15%. The new import curbs are thus also seen as a move to protect domestic interests and ensure reciprocal trade practices.

India’s clampdown on Bangladeshi imports is a multifaceted response to both economic and geopolitical developments: retaliating against Bangladesh’s trade barriers, countering Dhaka’s diplomatic tilt towards China, and addressing longstanding industry grievances. The restrictions are expected to significantly disrupt Bangladesh’s export earnings from India and signal a period of heightened tension and recalibrated engagement between the two neighbours.

Agencies