New Delhi, May 18, 2025 – India has introduced new restrictions on imports from Bangladesh through its land borders, escalating trade tensions between the two South Asian neighbors. The move, announced by India’s commerce ministry, targets key Bangladeshi exports such as ready-made garments, cotton products, processed foods, and wooden furniture, limiting their entry via several northeastern border points.
The decision follows a turbulent period in bilateral relations, sparked by the ousting of Bangladesh’s former prime minister, a close ally of India, who fled to New Delhi last year. Since then, diplomatic ties have been strained, with both nations imposing reciprocal trade barriers. Last month, Bangladesh restricted yarn imports from India through land routes, prompting India’s latest response.
Impact on Bangladesh’s Economy
Bangladesh, heavily reliant on exports, faces significant challenges due to these curbs. The country’s garment sector, a cornerstone of its economy, is expected to feel the immediate brunt. Industry leaders expressed concern but remained cautiously optimistic about mitigating the fallout.
“These restrictions pose a serious challenge for our exporters, particularly in textiles,” said a spokesperson for Bangladesh’s knitwear industry. “However, we are exploring alternative routes and markets to cushion the impact.”
A major Bangladeshi conglomerate, which exports processed foods, plastics, and furniture to India, described the curbs as a “critical hurdle.” The company, with annual exports to India worth tens of millions, called for urgent dialogue to resolve the trade dispute.
Trade Imbalance and Regional Dynamics
Bilateral trade data underscores the stakes. In the first 10 months of Bangladesh’s 2024 financial year, the country imported $9 billion in goods from India while exporting just $1.51 billion, highlighting a significant trade imbalance. India’s decision to cancel a 2020 transshipment agreement in April, which allowed Bangladeshi cargo to reach third countries via Indian borders, further complicates matters for Dhaka.
Bangladesh’s commerce ministry, caught off-guard by the announcement, said it was awaiting official documentation before formulating a response. “We need to review the details to decide our next steps,” a ministry official stated.
A Path Forward?
Analysts warn that escalating trade restrictions could harm both economies, given their interdependence. Bangladesh’s garment and textile industries, which employ millions, rely on access to Indian markets, while India benefits from affordable Bangladeshi goods and regional trade stability.
Industry groups on both sides have urged diplomatic negotiations to de-escalate tensions. “A tit-for-tat approach will only hurt businesses and consumers,” said a Dhaka-based trade analyst. “Both nations need to prioritize dialogue over protectionism.”
As tensions simmer, the region watches closely to see whether India and Bangladesh can find common ground or if trade barriers will further strain their once-close partnership.
