India yesterday said it has revoked the transshipment facility to Bangladesh's export cargo to third countries transiting through its land borders to Indian airports and ports, but made it clear that the measure would not affect Dhaka's trade with Nepal and Bhutan through Indian territory.
The move, however, is likely to increase the cost of Bangladesh's apparel exporters who also deliver export orders to Western market via India's airport, namely, Indira Gandhi International Airport in New Delhi.
In a notification on Tuesday, the Central Board of Indirect Taxes and Customs (CBIC) of India said it rescinded the transshipment of export cargo from Bangladesh to third countries through Land Customs Stations (LCSs) to ports or airport, in containers or closed-bodied trucks.
An Indian circular in June 2020 had allowed this facility.
In its Tuesday's notification, the CBIC said it decided to revoke the 2020 circular with immediate effect, but added that cargos that already entered India can exit the Indian territory.
Explaining the decision, Indian Ministry of External Affairs Spokesman Randhir Jaiswal told reporters yesterday that the transshipment facility to Bangladesh for third country cargo resulted in a "significant congestion" across Indian airports, leading to backlog, delay and a rise in logistics cost for Indian exporters.
He, however, added, "It has no impact on Bangladesh's trade with Nepal and Bhutan."
Jaiswal's comment came in reply to a question if the move was linked to Bangladesh Chief Adviser Dr Muhammad Yunus's recent remarks made in China, seeking extension of the latter's "economic sphere" through northeastern India to Bangladesh to access the Bay of Bengal.
India's decision comes at a time when Bangladeshi goods, particularly readymade garments, face higher tariffs during entry to the US market, the single biggest destination for Bangladeshi goods.
"This is going to affect us. Our opportunity for shipment will shrink, and our cost will go up," said Faruque Hassan, a former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
He said that the volume of garments shipped via India is not significant. "But it is a setback for the industry. India should not have made this decision."
On February 15, 2025, India's Apparel Export Promotion Council (AEPC) requested to the CBIC to revoke the transshipment facility for third-country exports from Bangladesh.
AEPC Chairman Sudhir Sekhri had said at the time that allowing Bangladeshi export cargo from Delhi Air Cargo Terminal will further increase the logistical challenges and increase the transport cost for Indian apparel exporters.
"Almost 20-30 loaded trucks come to Delhi every day which slows down smooth cargo flow…. This has led to an excessive increase in air freight rates, delay in handling and processing of export cargo and severe congestion at the cargo terminal at the IGI Airport, Delhi, resulting in exports of Indian apparel through Delhi air cargo complex," he added.
Earlier, such transshipment of Bangladesh export cargo was allowed only through Kolkata airport.
International clothing retailers and brands sourcing from Bangladesh prefer the Delhi airport to Dhaka's Hazrat Shahjalal International Airport (HSIA) to carry goods due to the lower tariff offered by India.
The tariff at HSIA is so high that buyers remain competitive even when their goods travel a distance of nearly 1,900 kilometres in trucks from Bangladesh to Delhi via Benapole and Petrapole.
For example, it costs $3 to transport one kilogramme of garment items from the HSIA to destinations in Europe. The charge is $1.2 if the goods are sent via Delhi's Indira Gandhi International Airport.
Currently, 1,000-1,500 tonnes of Bangladeshi products, mostly RMG items, are shipped to western markets through this airport, according to airport sources. 
Selim Raihan, executive director of South Asian Network on Economic Modeling (SANEM), said that Trump's reciprocal tariffs are going to take effect from today.
"On the same day, India's decision to cancel the transshipment facility for Bangladesh's export cargo to third countries is a concerning development.
"Given the vital role this facility has played in facilitating trade and reducing costs, the sudden move will likely increase the logistical burden on Bangladesh, potentially impacting its competitiveness in regional markets."
He said this decision appears to be a response to growing competition in sectors such as readymade garments, but it underscores a broader issue of trade dynamics between neighbouring countries.
"Such a move is not even consistent with World Trade Organisation."
He said that as the global trade landscape becomes more complex and competitive, cooperation between developing countries like Bangladesh and India is more important than ever.
The two countries share a long history of economic and cultural ties, and maintaining a smooth flow of trade is essential for both, he added.
"India is among the top trading partners of Bangladesh, and this change in policy is not consistent with the future prospects of an enhanced bilateral relationship. We sincerely hope that India will reconsider its position and engage in dialogue to find a solution that benefits both countries," said Raihan, also a professor of economics at Dhaka University.
Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said the development can be seen as a major blow to regional integration and cooperation.
"Ironically, it comes so soon after the BIMSTEC Summit, only to demonstrate the lack of genuine commitment to promoting trade within the region."
He said given the current turmoil in global trade, particularly in the face of President Trump's reciprocal tariffs, there is serious consideration globally for exploring trade opportunities through South-South cooperation—especially increasing trade among Asian nations.
"In that context, the revocation of the transshipment facility is deeply disappointing and sends the wrong signal."
Zahid Hussain, a former lead economist of the World Bank's Dhaka office, said India's decision to suspend transshipment facilities for Bangladesh is unfortunate and unnecessary.