THE CONTEXT: On 8 April 2025, India stopped a facility that let Bangladesh send its export containers through Indian ports such as Kolkata and Haldia. A month later, India also limited seven Bangladeshi products—mainly garments, plastics, and processed food—from entering through land ports in the North-East. These steps have shaken faith in the Bay of Bengal region’s push for smooth, rules-based trade.
THE BACKGROUND:
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- 2014 onwards – “Act East” policy: India began upgrading roads, rail, and ports on its east coast to link South Asia with Southeast Asia.
- 2015 – Sagarmala programme: Over 400 port and coastal projects to cut logistics costs.
- 2020 – Trans-shipment window: India allowed sealed Bangladeshi cargo to move by truck/train to Indian ports for loading onto global ships.
- 2025 – BIMSTEC Maritime Transport Cooperation Agreement (MTCA): Aims to harmonize customs and port rules among all seven Bay-rim countries.
WHAT, WHY, HOW:
| ASPECT | MEANING | DETAILS |
|---|---|---|
| What changed | India withdrew the 2020 trans-shipment permission. | Bangladeshi exporters must now choose more expensive sea routes via Colombo, Singapore, or their own underutilized Chattogram/Payra ports. |
| Why India says it acted | Congested terminals slowed Indian exporters. | Turn-around times at Kolkata exceeded 72 hours against the 24-hour target. |
| Why Bangladesh feels hurt | Sees it as pressure for leaning closer to China and Pakistan. | Dhaka’s leaders recently described Bangladesh as a “lifeline” for India’s Northeast and welcomed increased Chinese investment. |
CURRENT SITUATION:
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- India–Bangladesh trade 2024-25: About US$ $ 15 billion; India enjoys a trade surplus of roughly US$ $ 6 billion.
- Ready-made garments make up over 80 percent of Bangladesh’s exports; losing fast Indian routes raises shipping cost by 5–7 percent per consignment.
- Visakhapatnam, Paradip and Haldia together handled over 200 million tonnes in 2024-25—proof of growing east-coast traffic.
WHY THE ISSUE MATTERS:
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- Trust in India’s leadership: Smaller neighbours watch whether India keeps trade separate from politics.
- Economic ripple effect: Higher export costs can slow Bangladesh’s growth and reduce demand for Indian inputs such as yarn and machinery.
- Strategic contest: China could fill gaps by funding Bangladeshi port upgrades, pulling Dhaka further into its orbit.
MAIN DRIVERS
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- Strategic hedging: Bangladesh balances ties with India and China for the best economic deals.
- Domestic lobbies: Indian textile producers fear competition from Bangladesh.
- Port efficiency goals: India wants east-coast ports to match international standards.
INDIAN POLICY TOOLS IN PLAY
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- Sagarmala (2015) – Modernise ports, build coastal economic zones.
- Maritime India Vision 2030 – Target sub-one-day port turnaround and 10 billion-tonne capacity by 2047.
- PM Gati Shakti (2021) – A digital map aligning rail, road, and port projects for faster clearances.
- Inland Waterway Protocol Routes – Cheaper, greener cargo link between India’s North-East and Bangladesh.
WORLD LESSONS
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- ASEAN Single Window – One online form for all customs reduces the scope for sudden policy shocks.
- European Union TEN-T corridors – Multicountry funding and legal guarantees keep trade open even during political disputes.
- East African Central Corridor – Kenya and Tanzania share operating authority so that no single country can block cargo.
THE PROBLEMS:
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- Policy unpredictability – Sudden shifts scare investors and push neighbours towards China-led options.
- Non-tariff barriers – Port-of-entry rules raise landed cost of Bangladeshi goods by up to 15 percent.
- Chokepoint dependence – Kolkata-Haldia handles most Bay traffic; any slowdown paralyses the region.
- Weak dispute resolution – BIMSTEC lacks a binding arbitration platform for trade quarrels.
- Climate risk – Rising sea levels threaten low-lying delta ports like Haldia and Chattogram.
THE CHALLENGES:
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- Fragmented agencies – Customs, shipping and border forces often act without coordination.
- Security concerns – Insurgency in India’s North-East slows cargo clearance.
- Myanmar instability – Civil war blocks the India–Myanmar–Thailand Highway, limiting overland redundancy.
- Finance gaps – East Coast port upgrades need billions of dollars beyond current budgets.
- Perceptions of dominance – Smaller BIMSTEC states fear India could weaponise other connectivity projects too.
THE WAY FORWARD:
| S.No | ACTIONABLE SOLUTIONS |
|---|---|
| 1 | Codify a BIMSTEC Port Access Protocol that guarantees non-discriminatory trans-shipment rights; embed automatic suspension only under force majeure, not political triggers, to restore credibility. |
| 2 | Create a joint “Bay Trade Facilitation Fund” capitalised proportionately by member-states and multilateral lenders to finance digital customs, green port retrofits, and single-window clearance systems. |
| 3 | Ring-fence logistics from geopolitics through a statutory clause in India’s Foreign Trade (Development & Regulation) Act, requiring Parliamentary oversight for punitive trade actions against Least-Developed Country partners. |
| 4 | Expand east-coast capacity beyond chokepoints by fast-tracking outer-harbour container terminals at Paradip and Vizhinjam, coupled with last-mile rail connectivity funded under Gati Shakti. |
| 5 | Leverage Inland Waterway-2 (Brahmaputra) & Protocol routes to provide tariff-rebated, climate-friendly alternatives for Bangladeshi exporters, thereby lowering pressure on the Kolkata-Haldia complex. |
| 6 | Institutionalise corridor governance councils with equal representation of port users (exporters, freight forwarders, state governments) to ensure transparency and data-sharing on dwell-time and tariffs. |
THE CONCLUSION:
India’s maritime heft in the Bay of Bengal comes from geography and infrastructure; durable leadership, however, rests on predictability and trust. Restoring Dhaka’s trans-shipment access within a multilaterally negotiated framework can convert the present setback into an opportunity to entrench genuinely cooperative regionalism.
UPSC PAST YEAR QUESTION:
Q. Do you think that BIMSTEC is a parallel organisation like the SAARC? What are the similarities and dissimilarities between the two? How are Indian foreign-policy objectives realised by forming this new organisation? 2022
MAINS PRACTICE QUESTION:
Q. Critically analyse whether India’s recent curbs on Bangladeshi trans-shipment and imports are compatible with its stated objective of fostering cooperative regionalism in the Bay of Bengal.
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