India ends transshipment facility for Bangladeshi exports to third countries

India has revoked a key transit facility that allowed Bangladesh to transport its export cargo to third countries using Indian land customs stations en route to ports and airports, local media report.

The Central Board of Indirect Taxes and Customs (CBIC) announced the decision on Tuesday with immediate effect, the Indian Express reports.

The move comes shortly after Bangladesh's Chief Advisor Muhammad Yunus suggested that China's economic reach should extend into India's strategically important, landlocked northeast region -- a comment that has drawn scrutiny in India.

However, cargo that has already entered into India may be allowed to exit Indian territory in line with the procedure outlined in the now rescinded circular on transshipments, the CBIC said.

Introduced in June 2020, the facility allowed Bangladeshi goods bound for third countries like Nepal, Bhutan and Myanmar to be transshipped through Indian land routes en route to seaports and airports, streamlining the export process to neighbouring nations.

During his four-day visit to China from Mar 26 to 29, Yunus described Northeast India as “landlocked” and referred to Dhaka as “the only guardian of the ocean for the entire region”.

The remark was seen by India as an attempt by Bangladesh to assert its strategic leverage over access to the northeast -- a point of concern for New Delhi, although Dhaka maintained that the comments were made in good faith.

Assam’s Chief Minister Himanta Biswa Sarma found Yunus’s comments to be “offensive” and “strongly condemnable”.

In an X post, he said that the remark undermined the “persistent vulnerability narrative associated with India’s strategic Chicken Neck corridor”.

The Indian Express report added that former trade officer and head of Global Trade Research Initiative (GTRI) Ajay Srivastava said that India had continuously supported Bangladesh’s interests and provided one-way, zero-tariff access to Bangladeshi goods, with the exception of alcohol and cigarettes, to the vast Indian market for the past two decades.

He told the Indian Express, “Bangladesh’s plans to establish a strategic base near the Chicken’s Neck area with China’s assistance may have prompted this action. Bangladesh has invited Chinese investment to revitalise the airbase at Lalmonirhat, near India’s Siliguri Corridor.”

The suspension of this facility is likely to disrupt Bangladesh’s export and import operations, as countries like Nepal, Bhutan, and Myanmar depend on Indian infrastructure for access to third-country markets.

With its withdrawal, Bangladeshi exporters are expected to encounter logistical bottlenecks, higher transportation costs, and overall increased uncertainty.

However, Srivastava told the Indian Express that the move might clash with India’s obligations under World Trade Organization rules, which require the free transit of goods to and from landlocked nations.

“According to WTO rules, particularly Article V of the General Agreement on Tariffs and Trade (GATT) 1994, all WTO members are required to allow freedom of transit for goods moving to and from landlocked countries. This means such transit must be unrestricted, free from unnecessary delays, and not subject to transit duties,” he was quoted as saying in the report.