NEW DELHI (TIP): India has revoked a key trans-shipment facility that permitted Bangladesh to export goods to third countries via Indian land customs stations. This decision follows remarks by Bangladesh’s interim government chief adviser, Muhammad Yunus, during his recent visit to China.
Yunus described India’s northeastern states as a “landlocked region with no access to the ocean” and portrayed Bangladesh as the “only guardian of the ocean in the region,” suggesting this as an opportunity for China to extend its economic influence.
However, the External Affairs Ministry clarified that these measures do not affect Bangladesh’s exports to Nepal or Bhutan transiting through Indian territory and explained that the decision was made due to logistical delays and higher costs, which were hindering India’s own exports and causing backlogs.
“To clarify, these measures do not impact Bangladesh exports to Nepal or Bhutan transiting through Indian territory,” he further said. The facility, introduced in June 2020, had streamlined trade for Bangladesh’s exports to third countries including Bhutan, Nepal, and Myanmar. This move, which effectively cuts off access to Indian ports and airports for such shipments, comes at a time when the United States has imposed extensive reciprocal tariffs on several countries, including 37 per cent on Bangladesh.
“It has been decided to rescind the aforesaid Circular No. 29/2020-Customs dated 29.06.2020, as amended with immediate effect. Cargo already entered into India may be allowed to exit the Indian territory as per procedure given in the Circular No. 29/2020-Customs,” the Central Board of Indirect Taxes and Customs’ circular, dated April 8, said.
The 2020 circular had permitted the trans-shipment of export cargo from Bangladesh to third countries through Indian Land Customs Stations (LCSs) on its way to Indian ports and airports.
Indian exporters, mostly those in the textile sector had previously urged the government to withdraw the facility, citing competitive concerns. Textile, mostly ready-made garments, account for 80 per cent of Bangladesh’s total exports.
Bangladesh is a big competitor of India in the textile sector.
“Now we will have more air capacity for our cargo. In the past, exporters have complained about lesser space due to the transhipment facility given to Bangladesh,” Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.
What is the trans-shipment facility?
The 2020 order by India’s customs department allowed Bangladesh to export goods to third countries via the Delhi air cargo complex.
This gave Bangladeshi exporters easier access to countries in the neighbourhood like Nepal, Bhutan and Myanmar.
However, it led to greater congestion at the cargo terminal at the Indira Gandhi International Airport in Delhi, delaying shipments of Indian goods and leading to a rise in air freight rates for Indian exporters.
The move by India to cancel the facility is likely to raise the costs of Bangladeshi exports to these countries and increase the transit time, making them less competitive. (ANI)