India stops Transhipment transit facility for Bangladeshi export cargo
Economy
6 min read
The Government of India has withdrawn the transhipment facility provided to Bangladesh to export to third countries using Indian airports and ports from 8 April 2025. A notification to this effect was issued by the Central Board of Indirect Taxes and Customs (CBIC). The Government of India had extended the transhipment facility to Bangladesh in June 2020 when the Sheikh Hasina government was in power in Bangladesh.
The relations between the two countries have deteriorated since Sheikh Hasina fled to India in August 2024 and a new interim government came to power in Bangladesh, which has displayed hostility to India.
The decision of the Indian government came after the meeting between Prime Minister Narendra Modi and the Bangladesh Chief Adviser Muhammad Yunus during the 6th BIMSTEC summit meeting in Bangkok, Thailand, on 4th April 2025.
The move is likely to hurt Bangladesh, whose economy is export dependent and has seen a considerable decline in export due to political turmoil in the country and the recent tariff imposed by American President Donald Trump on its exports.
Countries that have been exempted
- The Bangladeshi goods that use the Indian Land Customs Stations for export to Nepal and Bhutan have been exempted.
- For the rest of the world the Bangladesh exports, using the Indian Land Customs Stations to Indian ports or airports in containers or closed-bodied trucks, have been withdrawn.
Reason for withdrawal of the transhipment facility
Official Reason
- According to the government, the decision has been taken to safeguard the interests of the Indian exporter.
- The continuous influx of Bangladeshi cargoes was creating congestion at Indian airports and ports,
- Due to congestion, the Indian exporter suffered logistics delays and higher costs, which adversely affected Indian exports.
Unofficial Reason
- It has been done to teach a lesson to Bangladesh, which is trying to use China against India and is trying to build strategic ties with China.
Mumhamad Yunus on Indian Chicken Neck
- Muhammad Yunus, during his visit to China in March 2025, said that Northeast India was a landlocked area and Bangladesh was the only outlet for them to reach the sea.
- He also invited China to invest in Bangladesh and revitalise the Bangladesh Air Force airbase at Lalmonirhat, near India’s Siliguri Corridor.
- The Lalmonirhat is near the Indian chicken neck area, and the presence of China in the area will be a very serious security threat for India.
Chicken Neck Corridor
The 8 Northeastern states- Assam, Sikkim, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh, and Tripura- are connected to the mainland through a narrow road and rail strip corridor called the Siliguri Corridor or Chicken Neck.
The Siliguri corridor, which passes through the Darjeeling area of West Bengal, is just 20-22 km wide.
These states collectively share land borders with Bangladesh, Nepal, Bhutan, China, and Myanmar.
The Siliguri corridor is strategically very vital for India, and India will never accept a hostile foreign power-Bangladesh or China, to threaten the corridor.
WTO rules on Transhipment
According to the World Trade Organisation (WTO) rules, all WTO members are required to allow freedom of transit for goods moving to and from landlocked countries.
The WTO Trade Facilitation Agreement (TFA), Article 11, calls for transparent procedures, reduced inspections, and regional cooperation to facilitate cross-border trade.
Both India and Bangladesh are members of the WTO.
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