Analyzing India’s Transshipment Policy Repeal: Strategic and Logistical Impact on Bangladesh’s Export Sector

India’s Transshipment Revocation and Its Ripple Effects on Bangladesh’s Export Landscape: Strategic Insights for Trade and Logistics Professionals.

India’s decision in April 2025 to revoke the transshipment facility for Bangladesh—originally instituted in 2020—continues to reshape the regional trade and logistics environment across South Asia. Citing logistical limitations and underlying geopolitical considerations, India’s move has significant implications for Bangladesh’s supply chains, particularly its $50 billion ready-made garment (RMG) sector. For logistics and trade professionals, understanding these shifting dynamics is essential for navigating rising operational challenges and identifying new strategic pathways.

Rising Costs and Strained Supply Chains With access to Indian ports and airports—such as Kolkata and Delhi—curtailed, Bangladeshi exporters are increasingly reliant on domestic infrastructure like Chittagong Port and Hazrat Shahjalal International Airport. These facilities, however, come with substantial drawbacks: freight charges are up to 40% higher than those in India, and air cargo rates pose significant hurdles for the RMG sector’s time-sensitive, just-in-time delivery model.

By mid-2025, logistics costs for RMG exports to Europe and North America have surged by an estimated 15–20%, diminishing Bangladesh’s competitiveness against regional rivals like Vietnam and Cambodia. Chittagong Port, operating near maximum capacity, is now experiencing average delays of 2–3 days—raising the risk of contractual penalties and damaging supplier reputations.

To adapt, logistics professionals should prioritize optimization of domestic capacity. Investments in warehouse automation, digitized tracking systems, and last-mile logistics upgrades are critical, though capital-intensive. Exporters are encouraged to renegotiate buyer contracts to incorporate cost-sharing mechanisms or extend delivery timelines to cushion the impact of delays.

Strategic Route Diversification: Options and Implications Bangladesh’s long-term resilience depends on diversifying its export pathways. Each alternative carries unique operational challenges and strategic trade-offs: Domestic Port Development Expedited development of the Payra and Matarbari deep-sea ports can enhance logistical sovereignty by enabling direct shipping to Europe and Southeast Asia. However, with estimated completion timelines extending to 2027–2028 and costs exceeding $2 billion per port, logistics firms should consider public-private partnerships (PPPs) to accelerate financing. Interim enhancements at Chittagong and Mongla ports should be prioritized for immediate relief.

China-Myanmar Economic Corridor (CMEC) Leveraging Myanmar’s Sittwe Port and connecting to China’s Yunnan Province logistics network offers a potential gateway into Belt and Road Initiative infrastructure. However, political instability in Myanmar and projected infrastructure costs of approximately $500 million present

significant risks. Exporters exploring this route must conduct in-depth risk assessments, including potential geopolitical friction with India.

Sri Lanka’s Colombo Port and Expanded Air Freight
Redirecting shipments via Colombo or through Gulf and ASEAN air cargo hubs offers alternative logistics corridors. While sea freight via Colombo is competitively priced, it extends delivery times by 3–5 days. Air freight remains crucial for high-value RMG shipments but is constrained by Dhaka airport’s limited cargo capacity. Logistics firms should pursue bilateral agreements with Gulf carriers for preferential rates and explore sea-air multimodal strategies to balance cost with delivery speed.

BCIM Economic Corridor The Bangladesh-China-India-Myanmar rail corridor remains a long-term opportunity for cost-effective bulk transport. However, progress has stalled due to India-China tensions and diplomatic impasses since 2019. While this route should be monitored for future developments, it is not viable for short-term planning.

Shifting Regional Dynamics and Competitive Pressures
India’s move has curtailed Bangladesh’s re-export potential to neighboring countries like Nepal and Bhutan, thereby weakening its negotiating position within regional blocs such as SAARC and BIMSTEC. This has opened the door for competitors like Sri Lanka and Thailand to strengthen their regional presence.

Indian textile companies, including Vardhman Textiles and KPR Mills, have reported a 5–7% increase in international orders, benefiting from Bangladesh’s logistical constraints. To mitigate further erosion of market share, Bangladeshi trade bodies should push for enhanced trade agreements—particularly with ASEAN nations—and facilitate regional warehousing solutions to tap into underutilized trade potential with Myanmar and Northeast India.

Opportunities in the Indian Logistics Sector While Indian logistics operators—such as Container Corporation of India (CONCOR) and Gateway Distriparks—have experienced a 3–5% reduction in Bangladeshi cargo volume at key terminals, this has opened capacity for domestic e-commerce and rising export demand to Southeast Asia. Indian logistics professionals should pivot toward these growing segments, leveraging digital freight platforms for improved terminal utilization and operational efficiency.

Indian textile exporters, in parallel, have an opportunity to aggressively target European and North American buyers with competitive pricing, further capitalizing on Bangladesh’s supply chain disruptions.

Geopolitical and Regulatory Context India’s decision aligns with broader strategic concerns, particularly in response to remarks made by Bangladesh’s interim Chief Adviser Muhammad Yunus in March 2025 regarding Northeast India’s “landlocked” status. The revocation reflects India’s intent to safeguard the sensitive Siliguri Corridor and reassert control over regional transit dynamics.

For logistics professionals, this highlights the importance of integrating geopolitical risk assessments into logistics and supply chain planning. Additionally, India’s adherence to WTO transit obligations under GATT Article V may come under scrutiny, potentially inviting formal trade disputes. Exporters should closely monitor these developments and prepare contingency plans for additional regulatory constraints. Actionable Strategies for Industry Professionals Cost Optimization: Adopt dynamic pricing models and establish partnerships with freight forwarders to negotiate bulk shipping discounts.

Infrastructure Prioritization: Focus on short-term upgrades at Chittagong and Dhaka while supporting PPP models for deep-sea port acceleration.

Route Expansion: Pilot shipments via Colombo and Gulf air routes, and conduct feasibility studies for CMEC integration. Market Diversification: Build trust with existing buyers through proactive communication on delays, and explore untapped markets in Africa and Latin America. Geopolitical Resilience: Reduce dependency on Indian and Chinese trade corridors by cultivating relationships in ASEAN and Middle Eastern markets.

India’s revocation of the transshipment facility marks a turning point for Bangladesh’s export sector. Escalating logistics costs, infrastructure limitations, and intensified regional competition are placing considerable pressure on the country’s trade ecosystem. However, through targeted investments, route diversification, and strategic repositioning, logistics and export professionals can chart a path toward greater resilience and competitiveness. As South Asia’s trade architecture evolves, the ability to respond with agility, foresight, and innovation will define the next phase of growth for Bangladesh’s export industries—and determine how effectively the region adapts to its shifting geopolitical and economic realities.