India’s port restrictions to cost Bangladesh over $770 million: How Yunus govt’s hostile behaviour with India is costing the poor country billions of dollars

Bangladesh is likely to lose around $770 million after India imposed port restrictions on Bangladeshi goods, as per reports. The impact will particularly be seen in garments and processed goods. This comes at a time when Bangladesh, under its Islamist government, is grappling with economic challenges and internal turmoil.

India goes into ‘give hostile statement, lose millions of dollars’ mode against Bangladesh

As per the Global Trade Research Initiative (GTRI) report published on 18^th May 2025, a trade think tank, India’s decision to impose port restrictions may restrict imports worth $770 million from Bangladesh, nearly 42% of total inbound shipments. This would happen by stopping several goods from land routes and limiting them to a few seaports.

Union Ministry of Commerce and Industry on Saturday imposed immediate port restrictions on the import of several categories of goods from Bangladesh, following a directive issued by the Directorate General of Foreign Trade (DGFT). After this decision, key goods like garments, processed foods, and plastic items are now limited to select sea ports or barred from land routes entirely. Under the new policy, Bangladeshi garments, which are valued at USD 618 million annually, can now enter India only through two designated seaports, effectively barring access via land routes that previously served as primary trade arteries.  

The port restrictions have been imposed on import of all kinds of Ready-Made Garments, Fruit/ Fruit flavoured and Carbonated Drinks; Processed food items; Cotton and Cotton Yarn Waste; Plastic and PVC finished goods and Wooden Furniture.

The detailed notification states that Import of all kinds of Ready-Made Garments from Bangladesh shall not be allowed from any land port. However, it will be allowed only through Nhava Sheva and Kolkata seaports.

Import of Fruit/ Fruit flavoured and Carbonated Drinks, Processed food items like Baked goods, Snacks, Chips and Confectionery, Cotton and Cotton Yam Waste, Plastic and PVC finished goods, and Wooden Furniture will not be permitted through any Land Customs Stations (LCSs)/ Integrated Check Posts (ICPs) in Assam, Meghalaya, Tripura and Mizoram; and Land Customs Stations of Changrabandha and Fulbari in West Bengal.

India budget boost for textile industry to gain edge over Bangladesh’s once thriving now in shambles textile industry

Notably, the Indian textile manufacturers have long voiced concern over what they describe as unfair advantages enjoyed by Bangladeshi competitors, who benefit from duty-free imports of Chinese fabric and substantial government export subsidies. These factors reportedly give Bangladeshi exporters a 10-15 per cent pricing edge in the Indian market. The GTRI added in its report that these trade measures did not emerge in isolation.  

“The restrictions look like India’s response to Dhaka restricting imports from India on a large number of items and diplomatic pivot towards China the GTRI report added.  

In February this year, the Union Budget presented by Finance Minister Nirmala Sitharaman gave a big boost to the textile industry announcing a 19% increase in the Budget Estimates for AY 2026-27. The BJP-led government allotted Rs 5272 crores to the Ministry of Textiles this year as compared to Rs 4417.03 crores in the Financial Year 2024-25. Additionally, the government has decided to boost cotton production and has announced a five-year Cotton Mission.

Bangladesh used to be the second largest exporter of garments but the sector in the neighbouring country is looking at uncertainties amid a financial crisis, power crisis and violence. After the fall of the Sheikh Hasina-led government, India has scope to enhance increased cotton exports to the USA, UK, France, Spain, Italy, Netherlands, among others. India is thus, taking all measures to use advantage as businesses try to move away from Bangladesh.

India’s strict response came after Bangladesh pivoted toward China and restricted imports from India

Incidentally, India’s decision to imposed port restrictions is also being seen as a response to outrageous remarks by Bangladesh’s interim chief advisor, Muhammad Yunus regarding India’s northeast.

During a speech in China, Bangladesh’s Chief Adviser Yunus had earlier described India’s north-eastern states as a “landlocked region with no access to the ocean”. This comment has sparked diplomatic friction, with Indian officials viewing it as undermining the region’s connectivity and status.

Highlighting Dhaka’s increasing proximity with China, the GTRI report adds that the fall of Sheikh Hasina’s pro-India government in mid-2024 and the rise of an interim administration under Muhammad Yunus have brought a willingness to align with Beijing.

Yunus’s visit to China in March 2025 yielded USD 2.1 billion in new investments and cooperation agreements. All these developments, along with infrastructure projects like the Teesta River development, have posed a significant threat to India’s position in the region.

Since late 2024, Bangladesh has imposed a series of restrictions on Indian exports. These include an April 2025 ban on Indian yarn imports through five major land ports, tighter curbs on rice shipments, and import bans on dozens of Indian goods–from paper and tobacco to fish and powdered milk. Adding to the friction, Dhaka introduced a transit fee of 1.8 taka per tonne per kilometre on Indian goods moving through its territory.

The report added that these cumulative actions, along with operational delays and tightened port inspections, have hampered Indian exporters and triggered calls for a calibrated response.

Earlier on 9^th April, Indian govt announced the withdrawal of the transhipment facility previously extended to Bangladesh, citing logistical challenges and congestion at Indian ports and airports. Under this facility, Bangladesh was allowed to send container trucks from the Petrapole Land Port located on the India-Bangladesh border, the largest land port in South Asia, to Kolkata port, Kolkata Airport’s air cargo complex, Nhavasheva Port in Maharashtra, and Delhi airport. Similarly, Bangladeshi exporters could ship their products from Petrapole Land Port, Gede Land Port or Ranaghat Land Port using freight trains to Nhavasheva Port, also known as Jawaharlal Nehru Port. From the ports and airports in India, the cargo was then shipped to their final destination countries.

Just days after India discontinued transhipment facility for Bangladesh, the neighbouring country suspended the import of yarn from India through land ports citing loss to local textile millers. The land ports of Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari were the main entry points of Indian yarn into Bangladesh.

Besides economic challenges, especially the downfall of the textile industry, Bangladesh has also been struggling for electricity due to non-payment of dues to India’s Adani Power. Months after halting power supply to unrest-hit Bangladesh over non-payment of dues, Adani Power resumed electricity supply to the neighbouring country.

Both the units of Adani Power’s plants in Godda increased supply earlier this month after Bangladesh began clearing dues. It was reported that Adani Power is receiving $80- 90 million regularly from Bangladesh. This amount also covers payment for current consumption. The dues are estimated at around $820-830 million, which is expected to be paid in the coming months. Adani Group’s decision to resume power supply to Bangladesh came after the interim government in Bangladesh, led by Muhammad Yunus, requested that Adani Power resume ‘full supply’ from its plant in Jharkhand in February 2025.

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