India has decided to stop a special cargo transit route that allowed Bangladesh to export goods to third countries through Indian ports and airports. The Indian government made it clear, however, that this change will not affect Bangladeshi exports to Nepal and Bhutan. These exports can still pass through Indian land borders as usual.
This move comes after India faced rising delays and congestion at its key ports and airports. The Indian Ministry of External Affairs (MEA) said the decision was made to ease the growing pressure on its own logistics systems.
Transit Route Cancelled, But Not for Nepal or Bhutan
On April 8, 2025, India’s Central Board of Indirect Taxes and Customs (CBIC) issued a new notice. This notice cancelled the earlier one from June 29, 2020, which allowed Bangladesh to move cargo through Indian Land Customs Stations to ports and airports. Cargo already in India under this system can still leave the country under the old rules.
Randhir Jaiswal, spokesperson for the MEA, explained the move during a weekly briefing on April 9. He said:
“The transshipment facility extended to Bangladesh had, over a period of time, resulted in significant congestion at our airports and ports. Logistical delays and higher costs were hindering our own exports and creating backlogs. The facility, therefore, has been withdrawn on 8 April 2025.”
He stressed that the decision does not affect Bangladesh’s cargo transit to Nepal or Bhutan.
Possible Political and Strategic Motives
While India says the decision is about reducing congestion, media reports suggest deeper reasons. According to the Indian Express, the move may be linked to Bangladesh’s growing ties with China.
During a recent visit to China, Chief Adviser Muhammad Yunus asked for more Chinese investment in Bangladesh. He reportedly proposed creating a strategic economic zone close to India’s sensitive Siliguri Corridor, also known as the “Chicken’s Neck.” This narrow strip connects India’s mainland to its northeastern states.
Ajay Srivastava, a former Indian trade officer, told Indian Express that Bangladesh’s invitation to China to help revive the airbase at Lalmonirhat—near the Siliguri area—could have raised concerns in Delhi.
Bangladesh Downplays the Impact
Bangladeshi officials and business leaders say the change may not cause much trouble. They believe their country can manage without the facility, although it could reduce India’s income from cargo handling.
Abdullah Hil Rakib, former vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said India stands to lose more.
“India will lose significant revenue from the cargo space that was used by Bangladeshi goods,” he said.
Kabir Ahmed, president of the Bangladesh Freight Forwarders Association, also said the shift may cause some initial pressure. But he thinks it can be handled with proper planning. He noted that Bangladesh can start using airports in the UAE, Sri Lanka, and the Maldives for certain shipments, possibly at the same cost.
Third Terminal at Dhaka Airport to Help
The third terminal at Dhaka’s Hazrat Shahjalal International Airport is set to open by the end of this year. Experts say this terminal will greatly improve Bangladesh’s ability to handle cargo.
The ground and cargo operations at this terminal are expected to be managed by a Japanese company, which should bring better efficiency and faster service.
Professor Mustafizur Rahman from the Centre for Policy Dialogue said Bangladesh rarely used the Indian transshipment route anyway.
“If pressure arises at Dhaka airport, we occasionally tranship via India. If cancelled, it won’t cause much disruption,” he told The Business Standard.
He added that cargo operations could be started at the third terminal even before passenger services begin, if needed.
Need to Lower Air Freight Costs in Bangladesh
While the cancellation itself may not hurt exports, some in Bangladesh raised concerns about high air freight costs at home. Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said costs are still lower in India.
He urged the Bangladeshi government to look into why freight costs remain high and to try to bring them down. Lower air freight charges would help exporters remain competitive, especially if they cannot rely on Indian transit routes anymore.
A Diplomatic Concern
Some diplomats in Bangladesh see India’s move as a signal. M Humayun Kabir, former ambassador, said:
“India’s sudden decision sends a negative message. As neighbours, we rely on each other, and this bilateral matter would have been better addressed through discussion.”
He noted that Bangladesh also allows Indian goods to pass through its land and river routes, and added that the country may now rethink some of those agreements.
India’s decision to end the cargo transshipment facility for Bangladesh marks a shift in regional logistics. While it might not harm trade flows to Nepal or Bhutan, it could point to deeper tensions between the two neighbours. For Bangladesh, the focus now is on building up its own cargo handling abilities and reducing costs. For India, the goal seems to be clearing up internal bottlenecks while keeping a close eye on regional strategy.
As both countries continue to grow and compete in the region, stronger cooperation may be the best way forward. For now, Nepal and Bhutan can rest easy—their trade routes through India remain untouched.
