India withdraws trans-shipment facility granted to Bangladesh to export goods to third countries

New Delhi: The government has withdrawn the free transit facility it provided since 2018 for Bangladesh’s exporters to send consignments to third countries through Land Customs Stations, airports and seaports in India. 

New Delhi made the move just days after the head of the interim government in Dhaka, Muhammad Yunus, suggested that China could use Bangladesh to expand its economic influence on the ‘landlocked’ northeastern states of India. The reports about China building an airstrip in Bangladesh, close to the ‘Chicken’s Neck’ corridor – the link between India’s northeastern region and its mainland – also raised the hackles in New Delhi. 

Dhaka also invited Beijing to take part in a river conservation project close to Bangladesh’s border with India, near the Chicken’s Neck corridor.

“The transshipment facility extended to Bangladesh had, over a period of time, resulted in significant congestion at our airports and ports,” Randhir Jaiswal, the spokesperson of the Ministry of External Affairs, told journalists in New Delhi. “Logistical delays and higher costs were hindering our own exports and creating backlogs,” he said, adding that India had withdrawn the transhipment facility with effect from April 8.

New Delhi made the move even as Bangladesh’s apparel exports were hit hard by the 37% tariffs that President Donald Trump’s administration imposed on the tiny South Asian nation’s exports to the United States. 

The withdrawal of the transhipment facility is likely to hit Bangladesh’s exports to the US, Europe and West Asia. 

“To clarify, these measures do not impact Bangladesh exports to Nepal or Bhutan transiting through Indian territory," the MEA spokesperson told journalists in New Delhi.

New Delhi had in 2018 first started a pilot project to grant the transhipment facility to the exporters of Bangladesh through the LCSs, seaports and airports of India. The Central Board of Indirect Taxes and Customs under the Ministry of Finance issued a circular in June 2020 allowing the full-fledged transhipment facility for the exporters of Bangladesh through India.

The board on April 8 issued a fresh circular rescinding the one issued in June 2020. 

Beijing should turn the coastal region of Bangladesh into an extension of China’s economy, Yunus, the chief advisor of the interim government in Dhaka, said recently, causing unease in New Delhi. He also pointed out that India’s seven northeastern states were all landlocked with no access to the sea, and this created an opportunity for China and Bangladesh. He noted that China should take advantage of Bangladesh’s unique position as the “guardian of the ocean”. He made the comments a few days before his meeting with Prime Minister Narendra Modi in Bangkok.

India’s protest against the persecution of Hindus and other minority communities in Bangladesh after the change of government in the neighbouring nation, India’s silence over the request by the interim government of Bangladesh for extradition of Sheikh Hasina or its protest against her virtual addresses delivered from India on recent developments in Bangladesh, including the vandalism and demolition of the historic residence of her father and the founder of the nation Bangabandhu Sheikh Mujibur Rahman, emerged as irritants in the bilateral relations.

New Delhi has been concerned over China’s bid to drag Bangladesh into its orbit of geopolitical influence, including through support for development projects and defence cooperation. Bangladesh bought two submarines from China in 2016. China is also building a submarine base at Pekua in Cox’s Bazar in Bangladesh, much to the unease of the security establishment of India.