Bangladesh vs India: Can Dhaka afford a trade war?

Tensions between Bangladesh and India have reached a boiling point, raising serious concerns about the future of their economic partnership.

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With India suspending crucial transshipment facilities and Bangladesh halting yarn imports through key land ports, the already fragile trade relations between the two neighbors are under immense pressure. The fallout could have wide-reaching implications—not only for the two countries but also for landlocked neighbors like Bhutan and Nepal, who rely on these corridors.

INDIA HALTS TRANSSHIPMENT In April, India made the strategic decision to suspend its transshipment facility for export cargo bound for Bangladesh. This facility had served as a vital trade link not only between the two countries but also for Nepal and Bhutan, which depend on Indian routes to access Bangladeshi ports. Soon after, Bangladesh retaliated by suspending the import of yarn through major land ports including Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari.

The impact of these decisions is already being felt across the region.