NEW DELHI: The Indian government’s recent decision to restrict the import of ready-made garments (RMG) from Bangladesh via land routes is expected to drive up logistics costs and increase transit times. The move, seen as a retaliatory measure, targets a key segment of trade—garments, which account for nearly one-third of Bangladesh’s exports to India.
Previously, Bangladeshi apparel shipped through land borders reached Indian markets in just two to three days. Now, shipments must be rerouted through designated sea ports—Kolkata and Nhava Sheva (Mumbai)—before being transported overland to warehouses, leading to potential delays and added customs procedures.
“This decision could significantly disrupt Bangladesh’s apparel exports to India, especially given that 76% of imports come through the Petrapole land port alone,” said Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council. “It limits access to the Indian market, increases delivery time, and raises logistics costs, ultimately affecting export competitiveness.”
Many Indian firms have set up manufacturing units in Bangladesh to leverage cost benefits, including lower wages, subsidized power, and duty-free fabric imports from China. Bangladesh’s status as a Least Developed Country (LDC) also provides tariff advantages—though this is expected to change as the country moves to middle-income status.
“Indian manufacturers pay 5% GST on domestically sourced fabric, while Bangladeshi exporters enjoy duty-free imports and government incentives, giving them a 10%–15% cost advantage,” explained trade expert Ajay Srivastava.
For Indian retailers and global brands operating in India, shifting suppliers is not a simple task. Bangladesh’s scale of production and pricing make it a preferred sourcing destination. “If I have a large order, I go to Bangladesh—one supplier can fulfill it on time,” said the CEO of an Indian retail company.
India’s restrictions come in response to a series of trade barriers imposed by Bangladesh, including a ban on Indian yarn imports through five key land ports, tighter rice shipment controls, and import bans on several Indian goods such as paper, tobacco, fish, and powdered milk.
Compounding the tension, Dhaka recently introduced a transit fee of Taka 1.8 (Rs 1.25) per tonne per km on Indian cargo moving through Bangladesh. “These combined measures, along with operational delays and stricter inspections, have hampered Indian exporters and prompted calls for a calibrated response,” Srivastava added.
