How Stricter Import Channels by India Are Driving Bangladesh’s Quest for Economic Stability

New Delhi:

India has tightened import rules for certain goods from Bangladesh, creating uncertainty in Dhaka’s export market. This move raises concerns about the future of trade between the two countries.

As political dynamics shift in Bangladesh, Indian worries about its southern neighbor’s growing ties with China and Pakistan have increased. In response, Bangladesh’s interim government sought to reassure that trade with India would continue unimpeded. Commerce Adviser Sk Bashir Uddin stated, “We’ll address issues through discussions once we have official word from India.”

On Saturday, India’s Directorate General of Foreign Trade announced restrictions on several Bangladeshi imports, including readymade garments and processed foods. However, goods heading for Nepal and Bhutan will still pass through India. The new rules are effective immediately.

Specifically, imports of readymade garments will not be allowed at land ports but can be brought in via Mumbai and Kolkata seaports. Other restrictions include various food items and plastic goods escaping land customs in some northeastern states.

Despite these changes, Bangladesh remains India’s largest South Asian trading partner. In the financial year 2023-24, Bangladesh exported nearly $1.97 billion worth of goods to India. Total bilateral trade reached about $14.01 billion.

Bashir Uddin noted that not all exports would be affected. The garment sector, a backbone of Bangladesh’s economy, has faced challenges, yet trade is vital for both nations. Indian garment industries rely on Bangladeshi products due to competitive pricing.

This decision marks a significant shift in India’s trade policy with Bangladesh, which had been relatively open since the early 2010s. Some analysts believe that the restrictions reflect India’s dissatisfaction with Bangladesh’s recent foreign policy moves, especially after the political upheaval in August 2024 that saw Prime Minister Sheikh Hasina ousted.

By applying these port restrictions, India is exerting economic pressure without imposing direct tariffs, maintaining compliance with World Trade Organization rules while expressing discontent.

Recent data shows Bangladesh’s exports to India fell slightly from $2 billion in the previous fiscal year. The decline includes a 34% drop in knitwear exports and an 11.79% decrease in woven garments. Nevertheless, Bangladesh is still shipping various products to India, such as jute, leather goods, and seafood.

Prabir De, a professor at the Research and Information System for Developing Nations, pointed out that trade restrictions are common globally. He, however, noted that past trade issues between India and Bangladesh existed before recent political changes, highlighting the lingering complexities.

Reports indicate that the interim government in Bangladesh was unprepared for the magnitude of India’s restrictions, with some estimates suggesting losses could exceed 2,000 crore Bangladeshi taka. This situation has put additional pressure on the interim government and its ability to maintain robust economic relations.

Overall, while this decision by India could reshape trade patterns, it’s essential to recognize the complex interplay of politics, economy, and diplomacy within the region. Keeping an eye on this relationship will be critical for both nations in the coming months.

For more detailed insights, refer to ETV Bharat’s coverage.

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