India has canceled the long-standing transshipment facility that allowed Bangladesh to export goods to third countries through Indian land ports. The decision was officially announced in a notification by India’s central government on Tuesday (April 9), as reported by Indian Express. This move is expected to disrupt Bangladesh’s trade with countries like Bhutan, Nepal, and Myanmar.
India’s Central Board of Indirect Taxes and Customs (CBIC) stated in the notification that the circular issued on June 29, 2020 — which allowed the export of Bangladeshi goods to third countries through Indian land ports — has now been withdrawn.
According to the new circular, the decision takes effect immediately. However, goods that have already entered India under the previous approval will be allowed to leave the country under the existing system.
The Indian think tank Global Trade Research Initiative (GTRI) stated that due to the cancellation of the transshipment facility, Bangladesh will now face a longer, more expensive, and uncertain transportation route.
Ajay Srivastava, GTRI head and a former Indian trade official, noted that India has unilaterally provided duty-free access to Bangladeshi goods for the past two decades. However, recent plans to develop an airbase in Lalmonirhat, with assistance from China, near India’s sensitive ‘Chicken’s Neck’ corridor, have raised security concerns in Delhi.
He further added that the decision may raise questions regarding India’s obligations under the World Trade Organization (WTO). According to Article V of the WTO’s General Agreement on Tariffs and Trade (GATT), all member countries must allow free transit for goods from landlocked countries.
Additionally, Article 11 of the WTO Trade Facilitation Agreement calls for modernization and transparency in transit systems. It also emphasizes regional cooperation, minimal inspection, and simplified customs procedures.
It is important to note that Bangladesh shares a 1,596-kilometer border with India’s eight northeastern states — Assam, Arunachal Pradesh, Manipur, Meghalaya, Nagaland, Mizoram, Tripura, and Sikkim. These states are connected to mainland India through a narrow 22-kilometer-wide ‘Chicken’s Neck’ corridor.
Due to India’s latest decision, concerns have also been raised about possible disruptions to international trade for other landlocked countries like Nepal and Bhutan, which rely on Bangladesh for access.
