Transshipment facility withdrawal: India stands to lose, not Bangladesh, say experts
Experts also noted that India’s withdrawal of the transshipment facility is unlikely to cause significant disruption to Bangladesh’s trade
India's decision to withdraw the transhipment facility for Bangladesh's export cargo may backfire economically and diplomatically, according to trade and policy experts.
While the move was initially perceived as a potential hurdle for Bangladesh's regional trade, analysts argue that the long-term consequences are likely to be more detrimental for India, both in terms of lost revenue and regional goodwill.
"We believe this will not affect our business, but India will lose significant revenue, as they had allocated their surplus cargo space for our goods," said Abdullah Hil Rakib, former senior vice president of BGMEA.
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Bangladesh Freight Forwarders Association (BAFFA) President Kabir Ahmed said, "Initially this may create pressure, as our surplus cargo previously went through Indian airports."
However, he noted that it would be manageable through coordination among the Civil Aviation Authority, Biman Bangladesh Airlines, and BAFFA, as Hazrat Shahjalal International Airport needs to improve its cargo handling capacity.
"If needed, we can use Sri Lankan and Maldivian airports for additional cargo," he added.
He went on to say, "This will also help Bangladesh retain some additional revenue, while India will lose that amount. We have no idea why the Indian government has taken this decision — it may be a political one."
The opening of Dhaka Airport's third terminal will substantially increase its cargo handling capacity. A Japanese company is expected to manage the ground and cargo operations at the new terminal, which will further enhance efficiency.
The BAFFA president expressed optimism that the remaining work on the terminal may be completed by the end of this year.
Transhipment cancellation won't significantly disrupt Bangladesh trade
Experts also noted that India's withdrawal of the transshipment facility is unlikely to cause significant disruption to Bangladesh's trade.
"While Bangladesh doesn't heavily rely on the transshipment facility, occasionally using it to alleviate pressure at Dhaka airport, its potential cancellation is unlikely to cause significant disruption," Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told The Business Standard.
He said, "Instead, this presents an opportunity to expedite the launch of cargo services at the third terminal [at Dhaka airport]. Passenger services can be launched later."
Mustafizur stated that it would be inappropriate to withdraw other concessions extended to India simply because one Bangladeshi facility was cancelled.
"India's utilisation of these reciprocal arrangements has been limited due to several factors," he added.
M Humayun Kabir, former ambassador and President of the Bangladesh Enterprise Institute, told TBS that India's abrupt decision sends a negative message, emphasising the need for caution and mutual understanding between neighbours.
He suggested that such bilateral issues should be resolved through discussion.
Regarding Bangladesh's transit-transhipment facilities for India, Kabir said, "It is not a mater od reciprocal measures. We will analyse the benefits and make decisions accordingly."
'Transhipment withdrawal reflects trade tensions, not WTO-compliant'
Dr Selim Raihan, executive director of South Asian Network on Economic Modelling (Sanem), said, "This decision appears to be a response to growing competition in sectors such as ready-made garments, but it underscores a broader issue of trade dynamics between neighbouring countries. Such a move is not even WTO-consistent."
He stated that as the global trade landscape becomes more complex and competitive, cooperation between developing countries like Bangladesh and India is more important than ever.
The two countries share a long history of economic and cultural ties, and maintaining a smooth flow of trade is essential for both, he added
"India is among the top trading partners of Bangladesh, and this change in policy is not consistent with the future prospects of an enhanced bilateral relationship. We sincerely hope that India will reconsider its position and engage in dialogue to find a solution that benefits both countries," said Selim Raihan.
He went on to say, "A cooperative approach is needed to navigate the challenges of a rapidly changing global market, and such decisions should not hinder the shared growth and development of both countries."
