Trading blows, not goods: The worrying trend in India-Bangladesh economic relations
Since more than 99% of Bangladeshi jute exports to India happen through land routes, these restrictions would not only increase the costs but would also pose logistical challenges for Bangladeshi exporters.
The increasing use of non-tariff barriers (NTBs) by both India and Bangladesh signals a disturbing trend in the trade dynamics of two of South Asia's most integrated economies.
The restrictions announced by India very recently in four different categories of jute items imported from Bangladesh via land ports, redirecting them exclusively to Nhava Sheva Port in Mumbai, are likely to make a huge dent in the flow of trade between the two countries, as this will hamper the existing mode of transport significantly.
Since more than 99% of Bangladeshi jute exports to India happen through land routes, these restrictions would not only increase the costs but would also pose logistical challenges for Bangladeshi exporters. Though India may pin these decisions on regulatory or quality control issues, the abruptness and frequency of these restrictions invite speculation around a more strategic intent.
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This tendency is, however, not unique to India. Bangladesh has also introduced import restrictions on a number of Indian items since late 2024, including Indian yarn, powdered milk and rice; in addition to new transit fees on Indian cargo. Bangladesh has recently decided to close three land ports on the India border, citing a lack of infrastructure and minimal trade activity.
These actions may appear as part of a larger trend of trade tensions and restrictions between the two countries. This also contributes to an increasing pattern of protectionism, thus undermining the trust and predictability required for stable bilateral trade.
It is particularly worrisome that both countries, traditionally close partners, are resorting to port restrictions and NTBs, rather than engaging in transparent dialogue to resolve trade irritants. These unilateral actions are not only detrimental to bilateral trade, which is heavily skewed in India's favour (with Bangladesh importing $12 billion worth of Indian goods and exporting around $2 billion to the Indian market), but also damage the prospects for greater regional economic integration in South Asia.
In a time of global trade uncertainty and rising geopolitical tensions, countries in the region should be moving toward extended cooperation, not regressive protectionism that can fragment existing supply chains and hinder industrial development.
What is urgently needed now is open, sustained dialogue between New Delhi and Dhaka, divorced from short-term political calculations. Trade should be seen as a channel for mutual economic resilience rather than a tool for exerting pressure.
Both governments must prioritise structured negotiations, explore mechanisms for resolving NTB disputes, and create institutional platforms that facilitate private sector engagement. Political differences should not be allowed to eclipse the larger benefits of economic cooperation, especially when the future of regional stability and prosperity depends on it.
The write-up is taken from the Facebook page of Dr Selim Raihan, who serves as the Executive Director of the South Asian Network on Economic Modelling (Sanem).
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
