Ban on land imports of Bangladesh garments escalates trade row, squeezes margins

By: Shantanu Bhattacharji

The ban on garment imports via land ports shifts trade to costlier seaports and air hubs, raising logistics expenses. Also, it threatens Bangladesh’s garment sector, which faces tight margins and delivery pressures, risking competitiveness and reliable order fulfilment.

India’s recent move to restrict import of ready-made garments and select goods from Bangladesh via land ports is more than a bureaucratic tweak—it’s a deliberate recalibration of regional trade dynamics. While shipments through seaports such as Nhava Sheva and Kolkata remain unaffected, the subtext is clear: New Delhi is signalling its readiness to leverage trade logistics as a tool of strategic statecraft. 

The trigger lies across the border. Dhaka’s recent imposition of new restrictions on Indian exports, coupled with the rollout of a transit fee on Indian cargo traversing Bangladeshi territory, marked a shift from cooperative to conditional engagement. Analysts say New Delhi’s deliberate slowdown of land-based imports is a calculated, measured response, reflecting a firm and targeted assertion of its interests in the bilateral ties. 

Notably, these developments did not emerge in isolation. Under the leadership of Muhammad Yunus, Dhaka imposed restrictions on Indian exports and introduced a transit fee on Indian cargo passing through Bangladesh. India’s selective slowdown of land-based imports is a deliberate and measured response. However, this tit-for-tat escalation risks damaging a mutually beneficial economic partnership and could harm Indian consumers and supply chains as much as it affects Bangladeshi exporters. 

The land ports between India and Bangladesh have long served as vital arteries for a vibrant textile trade. As of March 31, 2024, India operated 12 land ports, six of which connect with Bangladesh. Among these, Petrapole—the largest land port in South Asia—handles over 90 percent of India’s land-based imports from its eastern neighbour. In FY24, more than half (52 percent) of India’s total imports from Bangladesh flowed through these land routes.

The ready-made garment (RMG) industry, primarily producing cotton and man-made fibre products, has long been the cornerstone of Bangladesh’s exports to India. Through the Petrapole border crossing alone, garments accounted for 44 percent of India’s imports from Bangladesh in FY24. In FY25 (April 2024 to February 2025), India imported $340.6 million worth of garments from Bangladesh—already surpassing the total for the entire previous year. This strong growth trajectory now faces significant uncertainty. 

Shifting trade from land routes to seaports and air cargo hubs will sharply raise logistical costs. The garment sector—operating on razor-thin margins with tight delivery deadlines—cannot easily absorb these additional expenses. Indian retailers and consumers, particularly in the budget fashion segment reliant on Bangladeshi imports, are likely to face higher prices. Amid ongoing inflation concerns, this administrative hurdle risks quietly driving up costs across the economy. 

Strategically, New Delhi’s approach highlights a growing trend of transactional diplomacy in South Asia, where trade routes and infrastructure are leveraged to counter perceived protectionism by neighbouring countries. However, this tactic raises questions about policy consistency and long-term vision. While India promotes regional integration through frameworks like BIMSTEC and the BBIN corridor, such sudden and ad-hoc restrictions undermine confidence among businesses and foreign investors alike. 

Dhaka, for its part, must also reconsider the wisdom of using transit fees and trade restrictions as leverage. Bangladesh’s export-led economy is heavily reliant on stable regional trade, particularly with India, which serves as both a key market and a vital conduit for access to Nepal and Bhutan. Disrupting this relationship could yield diminishing returns. 

Land port restrictions may deliver a strong message, but they also risk disrupting the very trade ecosystem that India has spent years nurturing. Economic diplomacy should aim not just to punish, but to persuade — and ultimately, to build enduring partnerships.