India Restricts $770 Million Worth of Imports from Bangladesh Amid Escalating Trade and Diplomatic Tensions

India has imposed sweeping restrictions on the import of goods from Bangladesh through land ports, impacting trade worth approximately USD 770 million. This figure represents around 42 percent of total imports from Bangladesh, according to a report by the Global Trade Research Initiative (GTRI).

The decision, announced by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, came into immediate effect on Saturday. Under the revised policy, imports of key Bangladeshi exports such as garments, processed foods, and plastic items are now permitted only through select seaports or barred from land-based entry entirely.

Garments, which account for over USD 618 million in annual exports from Bangladesh to India, are the most severely affected. These products, previously routed primarily through land borders, will now be restricted to two designated seaports. This effectively shuts down the primary trade corridor used by Bangladeshi exporters, delivering a major blow to Dhaka’s textile industry.

According to GTRI, the move is likely driven by long-standing complaints from Indian textile manufacturers, who argue that Bangladeshi exporters enjoy an unfair price advantage of up to 15 percent. This advantage, they claim, stems from Dhaka’s duty-free access to Chinese fabrics and generous government subsidies that distort fair competition in the Indian market.

The report also suggests that the restrictions are part of a broader strategic response by New Delhi to a combination of recent developments in Dhaka’s economic and diplomatic posture. Since late 2024, Bangladesh has imposed multiple restrictions on Indian goods, including a ban on Indian yarn imports through five key land ports, tighter controls on rice exports, and import bans on products such as paper, tobacco, powdered milk, and fish. Dhaka has also introduced a new transit fee of 1.8 taka per tonne per kilometre on Indian cargo passing through its territory, further raising logistical and cost barriers for Indian exporters.

India’s move also follows a shift in Bangladesh’s political landscape. The fall of Sheikh Hasina’s pro-India government in mid-2024 and the rise of an interim administration under Muhammad Yunus have marked a noticeable tilt toward Beijing. During a high-profile visit to China in March 2025, Yunus secured USD 2.1 billion in investment commitments and bilateral cooperation agreements. The growing alignment with China, including plans for joint infrastructure projects such as the Teesta River development, has triggered concern in New Delhi about a potential erosion of its influence in the region.

Diplomatic tensions flared further after Yunus referred to India’s northeastern states as a “landlocked region with no access to the ocean” during a speech in China, a comment that Indian officials interpreted as undermining the region’s geopolitical and logistical standing.

Against this backdrop, the GTRI concludes that India’s latest trade restrictions reflect a broader recalibration of policy aimed at safeguarding national economic interests while responding to shifting regional alignments. With mutual trade disruptions and political mistrust escalating, observers warn that bilateral relations may deteriorate further unless both nations find common ground for constructive dialogue.