*Dhaka, August 17, 2025* — In a recently revealed policy decision,Bangladesh has turned down India’s request to facilitate Indian goods’transit through Bangladesh en route to the United States. The refusal stemsfrom mounting concerns over high U.S. tariffs that apply to re-exportedIndian-origin goods, even when routed via third countries without majortransformation.Background and Reasoning
Indian exporters had hoped to use Bangladesh as a corridor to reach theU.S. market, seeking relief from rising global logistic costs and sluggishdemand. However, under the U.S. reciprocal tariff regime introduced inearly April 2025—specifically Executive Order and CSMS #64680374—tariffsare imposed based on the *origin* of the exporter, not modified by meretransit or re-export. As a result, Indian products sent through Bangladeshwithout substantial transformation will still be deemed Indian-origin andsubject to U.S. tariffs (Textile Newslink).
Bangladesh officials also noted that the country currently lacks thenecessary industrial infrastructure to perform significant transformationon Indian goods that would reclassify them as Bangladeshi origin. Investingin such capacity would require major foreign direct investment andindustrial expansion, which is not yet feasible (Textile Newslink).Broader Context: Trade Tensions Intensify
This development unfolds amid broader strains in Bangladesh–India traderelations:
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In *April 2025*, India abruptly *rescinded a transshipment facility* established in 2020 that allowed Bangladesh to export goods to third countries through Indian land customs stations, ports, and airports. The decision, effective from April 8, was attributed to increasing congestion, delays, and logistical costs affecting India’s export operations (The Daily Star link, Business Standard link, Dhaka Tribune link ). –
This facility’s withdrawal has significantly heightened transportation costs and disrupted trade routes for Bangladeshi exporters—who previously enjoyed cheaper, faster access to Western markets via Indian gateways like Delhi’s IGI Airport (Dhaka Tribune link, bdnews24.com link, Textile News link, The Business Standard link, Insights IAS link ). –
Moreover, bilateral tensions have escalated following Bangladesh’s interim government head Muhammad Yunus’s remarks in China—describing Northeast India as “landlocked” and Bangladesh as its “guardian to the ocean”—which many viewed in New Delhi as a strategic challenge (ORF Online link, The Diplomat link, India Toda link y.
Trade Impact and Economic Ramifications
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The refusal to serve as a transit route to the U.S. reflects a carefuleconomic calculation by Bangladesh. Accepting Indian-origin goods fortransit would neither circumvent U.S. tariffs nor enhance Bangladesh’scompetitiveness; instead, it could compromise policy integrity andoverextend its limited industrial-processing capabilities.
Moreover, Bangladesh’s own export competitiveness is under strain due toU.S. tariff pressure—though a relief came recently when it secured a *20%tariff* on garment exports to the U.S., reduced from the initially proposed37%, offering much-needed support to its $40 billion apparel sector (Reuterslink).Looking Ahead: Strategic and Diplomatic Pathways
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*Policy Balance*: Bangladesh aims to safeguard its export competitiveness while avoiding policies that may not yield tangible economic benefits. –
*Regional Trade Coordination*: Commentators and trade analysts urge both South Asian nations to prioritize structured dialogue and align trade strategies through regional platforms like BIMSTEC or BBIN to ensure smoother customs processes and resilience amid geopolitical shifts –
*Diplomatic Engagement*: With India navigating both domestic logistic concerns and geopolitical tensions, high-level bilateral talks could lay the groundwork for rebuilding economic trust and exploring conditional, restructured transit arrangements
Bangladesh has declined India’s request to route exports to the U.S.through its territory, citing that such a move offers no tariff relief andlacks infrastructural viability. This decision aligns with broader regionaltrade tensions—marked by India’s revocation of transshipment facilities—andhighlights the intricate balance between economic pragmatism and diplomaticstrategy amid evolving global tariff regimes.