Publish: 09:05, 03 May, 2025

Businesses brace for fallout as India-Bangladesh tensions escalate

Online Desk
Businesses brace for fallout as India-Bangladesh tensions escalate
Representative Photo: Collected

Businesses are bracing for impact as neighbours India and Bangladesh impose tit-for-tat trade restrictions after months of tension.

Last month, Bangladesh restricted land imports of Indian cotton yarn to protect local industries. Days earlier, India had abruptly stopped a transhipment facility that allowed Bangladesh to export goods to third countries via Indian ports and airports, citing "congestion".

Relations have deteriorated since former Prime Minister Sheikh Hasina was ousted in August following mass protests. Now in exile in India, Hasina faces charges in Bangladesh of crimes against humanity, money laundering, and corruption — all of which she denies.

Dhaka has demanded her extradition, but Delhi has not responded officially.

India has criticised alleged attacks on the Hindu minority in Bangladesh, saying the recent killing of a Hindu leader "reflects a pattern of systematic persecution under the interim government". Bangladesh denies targeting minorities, calling such incidents politically motivated or ordinary crimes. Hindus comprise less than 10 percent of its 170 million citizens.

Yarn, critical for Bangladesh’s garment factories, can still enter by sea and air — but those routes are slower and costlier. In 2024, India exported $1.6 billion worth of cotton yarn to Bangladesh, with a third transported via land ports.

The halted transhipment facility had allowed Bangladeshi exporters to move high-end clothing by road to Indian airports, speeding up deliveries to Western markets.

"It's a blow [to Bangladesh's fast-fashion export industry]," said Anis Ahmed of MGH Group. "The India route got cargo to Western countries in a week. By sea, it takes up to eight weeks."

Bangladesh, the second-largest global garment exporter after China, shipped $38 billion in clothing last year. Over $1 billion used the India land-air route. With limited air freight capacity and under-equipped airports, direct exports are difficult.

Many see India’s move as a reaction to comments by interim leader Muhammad Yunus during a China visit. He had called Bangladesh the "only guardian of the ocean" for India’s landlocked north-east and said the region could be an "extension of the Chinese economy".

Leaders in India’s north-east called the remarks "offensive". The region, connected to the Indian mainland by the narrow Siliguri Corridor, is considered strategically vulnerable.

During Yunus’s China visit, Bangladesh also welcomed Beijing’s interest in a $1 billion Teesta River project, near the sensitive Siliguri zone. Indian analysts view Chinese involvement there as a potential security risk.

Public frustration is rising in Bangladesh over Indian visa restrictions. Previously, around two million Bangladeshis visited India annually. Now, daily visa approvals have dropped by over 80 percent, local media report.

Hasina's stay in India and the extradition demand remain major irritants.

"They should realise that there is no way that we can just hand Hasina to them. We know what will happen to her if she's handed over. I think public opinion in India would not countenance that," said Shyam Saran, former Indian foreign secretary.

Amid tensions, India’s clothing manufacturers have called for a ban on Bangladeshi garment imports via land. Bangladeshi economist Debapriya Bhattacharya warns against escalating trade restrictions. "I think there is a strong view nowadays in Bangladesh that we should also reassess the other transit and transhipment facilities given to India [for its north-eastern states] by the earlier [Hasina] government," he said.

India uses Bangladeshi routes to reach its north-east, saving time and cost, though officials say trade volumes have fallen short of expectations.

Meanwhile, Bangladesh is also renewing ties with Pakistan. Last month, Pakistan’s Foreign Secretary Amna Baloch visited Dhaka — the first such visit in 15 years.

"I don't think there is any concern over Dhaka's reachout to Pakistan. If there is any suggestion that there is an intent to work together and make things difficult for India, then that will obviously cause concern," said Saran.

With official rhetoric hardening, public sentiment in both countries is shifting. In Bangladesh, anti-India sentiment is rising, and Indian media are accused of exaggerating minority abuse and Islamist threats.

People-to-people ties are fraying. Analysts warn that unless calm is restored, the damage to trade and regional cooperation could deepen.

Courtesy: BBC

Bd-pratidin English/FNC

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