INDIA BANGLADESH TRANSSHIPMENT FACILITY : INTERNATIONAL RELATION
NEWS: India hits back after Yunus Northeast remark, halts transshipment facility for Dhaka
WHAT’S IN THE NEWS?
India withdrew the transshipment facility it had granted Bangladesh since 2020, citing port congestion, affecting Bangladesh’s exports to Nepal, Bhutan, and Myanmar. The move, while officially operational, raised geopolitical concerns amid Bangladesh’s growing engagement with China.
Context
• In 2020, India introduced a transshipment facility to help Bangladesh export goods to neighboring landlocked countries such as Nepal, Bhutan, and Myanmar using Indian ports and airports.
• This move was a part of India’s regional connectivity strategy and aimed to strengthen regional integration under initiatives like BBIN (Bangladesh-Bhutan-India-Nepal).
• On April 8, 2025, India officially withdrew this facility, citing logistical and operational challenges.
What is Transshipment?
• Transshipment refers to the movement of cargo through an intermediate location (such as a port or airport) before reaching its final destination.
• This process is especially crucial when direct transportation routes are unavailable or not economically viable.
• Transshipment plays a vital role for landlocked countries (e.g., Nepal and Bhutan) and countries with limited port capacity (e.g., Bangladesh).
Importance of Transshipment to Bangladesh
• Bangladesh lacks sufficient deep-sea port infrastructure, making it dependent on transshipment for international trade.
• It has historically relied on foreign ports such as Singapore and Colombo, as well as Indian ports and airports, to ship goods abroad.
• Key export industries, especially the Readymade Garments (RMG) sector, depend heavily on uninterrupted transit access to countries like Nepal, Bhutan, and Myanmar.
India’s Transshipment Facility to Bangladesh (Since 2020)
• India permitted Bangladesh to utilize its ports (e.g., Kolkata, Haldia) and airports (e.g., Delhi, Mumbai) to transship goods to third countries.
• The facility significantly boosted trade efficiency, reduced travel time, and supported regional integration goals under India’s Neighbourhood First and Act East policies.
• It also served as a logistical lifeline for Bangladesh’s exports to Nepal, Bhutan, and Myanmar.
Withdrawal of Transshipment Facility (April 8, 2025)
• India announced the termination of the facility, citing heavy congestion at major ports and airports, which had begun affecting India’s own export logistics.
• The decision came amid a surge in logistical backlogs, shipment delays, and rising operational costs in Indian trade hubs.
• The withdrawal applies specifically to transshipment via Indian facilities, not to road or rail exports through Indian territory.
Official Justification from India
• The Ministry of External Affairs (MEA) clarified that the move was operational and logistical, not motivated by any diplomatic or political considerations.
• India reassured that Bangladesh’s exports to Nepal and Bhutan via Indian roads and rail routes will continue unhindered.
• The explanation reflects India’s need to prioritize domestic trade flows while still maintaining core regional transit commitments.
Geopolitical Undercurrents and Timing
• The withdrawal closely followed the visit of Muhammad Yunus, an economic adviser in Bangladesh’s interim government, to Beijing.
• During the visit, Yunus emphasized the need for greater China-Bangladesh trade cooperation and sought access for Chinese goods to India’s Northeast via Bangladesh.
• While India did not officially link the withdrawal to this visit, the timing raised speculation that the move could be a geopolitical signal regarding China’s increasing regional presence.
• It reflects India’s cautious stance on China-led infrastructure and trade routes in its immediate neighborhood.
Economic Implications for Bangladesh
• The Readymade Garments (RMG) industry, a major foreign exchange earner for Bangladesh, may experience delays and higher costs due to the loss of Indian port access.
• Exporters may now need to reroute shipments through costlier or more distant ports such as Singapore or China.
• Landlocked export destinations like Nepal and Bhutan will face slower delivery timelines and increased customs complexity.
• The move may create pressure on Bangladesh to invest in port upgrades and enhance self-reliant logistics infrastructure.
Impact on Regional Trade and Connectivity
• The decision could strain regional trade dynamics, particularly within the BBIN grouping that relies on India as a central transit corridor.
• Bangladesh may explore alternative trade corridors through China or the Bay of Bengal region, including the China-Myanmar Economic Corridor or Chittagong deep-sea port.
• These shifts could lead to greater Chinese influence in South Asia’s supply chains and logistics networks.
• Countries dependent on Indian transshipment, especially Nepal and Bhutan, may also feel the impact due to restricted access to Bangladeshi goods.
India’s Strategic and Domestic Concerns
• India is seeking to protect its own trade efficiency, given the rising pressure on ports and airports from increased export volume and international trade commitments.
• The move may be part of a strategic balancing act, addressing domestic logistical challenges while subtly signaling concern over Bangladesh’s tilt towards China.
• India may also be re-evaluating infrastructure sharing agreements, especially when they could enable third-country strategic access, including from China.
• The action reflects India’s larger strategic approach to safeguard its influence in the eastern subcontinent, especially near its sensitive Northeastern borders.
Source: https://indianexpress.com/article/business/india-ends-transshipment-facility-bangladesh-yunus-chinese-northeast-9933931/