India has restricted Bangladeshi imports at its ports after Dhaka blocked Indian yarn, worsening relations that have declined since Sheikh Hasina’s exit, raising concerns about regional trade ties.
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India Tightens Trade Rules on Bangladesh as Yarn Ban Sparks Retaliation
New Port Restrictions Shake Up Regional Trade
India has rolled out tough new restrictions on Bangladeshi imports, limiting them to just two seaports in a bold response to Bangladesh’s recent block on Indian yarn. This trade clash, announced on May 17, 2025, by India’s Directorate General of Foreign Trade, marks a fresh low in relations between the two neighbors, already strained since the departure of former Bangladeshi leader Sheikh Hasina.
Under the new rules, Bangladeshi goods like ready-made garments, processed foods, soft drinks, plastics, and wooden furniture can only enter India through the seaports of Nhava Sheva (near Mumbai) and Kolkata. Land ports, especially those in India’s northeastern states and West Bengal—like Phulbari, Changrabandha, and crossings in Assam, Meghalaya, Tripura, and Mizoram—are now off-limits for these imports. Essential items such as fish, LPG, edible oil, and crushed stone are exempt, offering some relief.
A Blow to Bangladesh’s Garment Industry
Bangladesh, a powerhouse in global garment exports with $38 billion in 2023, sends about $700 million worth of clothing to India each year, mostly through northeastern land ports. These new restrictions could throw a wrench in this trade, forcing exporters to reroute through costlier and slower seaports. Manufacturers on both sides are bracing for disruptions, while India’s northeastern states, which depend on this cross-border commerce, may feel the pinch.
Indian officials defend the move, pointing to Bangladesh’s recent trade barriers, including steep transit fees, strict inspections, and a ban on Indian rice exports since mid-April. They also highlight a trade imbalance—Bangladesh enjoys easy access to India’s markets, while Indian exporters face growing hurdles. The government says these steps align with its “Atmanirbhar Bharat” (self-reliant India) push to bolster local industries.
Yarn Ban Fuels the Fire
The spark for India’s retaliation was Bangladesh’s April 13 decision to shut its land ports to Indian yarn, a critical material for its massive garment sector. Yarn accounts for nearly a third of India’s textile exports to Bangladesh, and the ban has hit Indian suppliers hard, forcing them to pivot to pricier shipping routes like container vessels or inland waterways. With diplomatic talks failing to resolve the issue, India has upped the ante by not only curbing imports but also suspending a deal that let Bangladesh use Indian ports and airports for shipments to other countries—a move that stings Dhaka’s logistics ambitions.
Political Tensions Add Fuel
This trade spat comes at a rocky time. Since Sheikh Hasina, a close ally of India, left office, ties have soured. The interim government under Muhammad Yunus has struggled to curb rising attacks on minorities, particularly Hindus, fueling New Delhi’s unease. The combination of political friction and trade barriers has put both nations on edge, threatening the stability of their economic partnership.
As the standoff continues, businesses and communities on both sides are left wondering how long it will take for cooler heads to prevail and restore the flow of goods across their shared border.
