Strained ties: Non-tariff barriers and the future of Bangladesh-India trade relations

The trade relationship between Bangladesh and India has long been based on mutual dependence and cooperation. Their geographic closeness, economic links, and cross-border connectivity make this partnership strategically important.

However, some recent policy decisions and reactions from both sides have raised serious concerns. Especially, the imposition of non-tariff barriers is creating new problems. These affect not only trade but also trust and regional stability.

India has suddenly restricted certain Bangladeshi consumer goods – like fruit juice, processed foods, plastic items, and garments – through land ports in its northeast. In recent times, Bangladesh also imposed restrictions on importing Indian yarn through specific land ports.

Though these are not direct tariff hikes, they work as port restrictions and certainly non-tariff barriers; they limit trade routes and make business operations harder. The withdrawal of transshipment facilities by India for Bangladesh has added more pressure.

Importantly, India, including its northeast, is a valuable market for Bangladesh. There is steady demand there for Bangladeshi garments, food products, and plastics. These goods had long entered India by land without any major issues. Sudden limits now increase costs and hurt small and medium businesses near the border.

Garments, a major export item for Bangladesh, may now rely on distant sea ports like Kolkata or Nhava Sheva. This raises transport costs, delays shipments, and hurts competitiveness.

At the same time, Bangladesh depends on Indian yarn, a key raw material for its textile and garment industries. Any import barriers raise production costs and disrupt the local industry. Sudden one-sided decisions harm both countries' industries and weaken the trust built over time.

While each country has the right to control its trade, stability, prior notice, and reasonable coordination are essential in policymaking. Sudden trade barriers bring uncertainty for businesses and hurt the region's trade system. Long-established supply chains may break down. Such actions also risk damaging bilateral trust and cooperation.

What's most needed now is a shift in mindset. These issues shouldn't be seen as rivalry or punishment. Instead, both countries should work together to find solutions. Both sides support regional unity, cross-border trade, and economic growth. So, the impact of non-tariff measures must be reviewed and reconsidered quickly.

Governments, policymakers, trade bodies, and the private sector must strengthen dialogue to prevent future crises. A sustainable, inclusive, and streamlined trade framework is needed – one that reduces sudden disruptions and builds stronger business ties.

Trade between Bangladesh and India is not just about their economic interests. It's vital for South Asia's unity, stability, and progress. This trade and business relationship must not weaken due to non-tariff barriers, lack of coordination, or reactive policies. The right path forward lies in dialogue, understanding, and long-term cooperation.

Selim Raihan is a professor at the Department of Economics of Dhaka University and the Executive Director of the South Asian Network on Economic Modeling (SANEM).