In a surprising move, India has revoked the facilities allowing Bangladesh to use its ports and airports for exporting goods to global markets. This decision, which came into effect on April 8, 2025, follows the announcement by U.S. President Donald Trump to increase tariffs on imports from several countries, including Bangladesh. The timing is critical as Bangladesh relies heavily on garment exports, which constitute a significant portion of its economy, and these exports often transit through Indian infrastructure to reach markets in Nepal and Bhutan.
The Indian Ministry of Foreign Affairs explained that the revocation was necessary due to severe congestion at Indian ports and airports, which had led to logistical delays and increased costs for Indian exports. "The facilities granted by our country led to a significant increase in Indian materials and raw materials, causing logistical delays and raising costs," stated spokesperson Randhir Jaiswal. He clarified that the decision does not affect trade between Bangladesh and its landlocked neighbors, Nepal and Bhutan.
Bangladesh's garment sector, which heavily relies on Indian airports like Kolkata and Delhi for shipping products to Europe and the United States, faces significant challenges due to this decision. Mostafizur Rahman, an economist at the Policy Dialogue Center in Dhaka, highlighted that the congestion at Dhaka airport and lower export costs via Kolkata were primary reasons for this reliance. He noted, "The road through India was very useful, especially after a major technical failure at Dhaka airport, which forced us to redirect goods through Indian facilities."
Former president of the Bangladesh Garment Manufacturers and Exporters Association, Farooq Hassan, expressed concern over the impact of this decision, describing it as a loss for Bangladesh, albeit manageable. He emphasized that alternatives exist, as Bangladesh also exports through ports in Singapore and Colombo. However, he lamented the utility of the Indian route, especially during technical disruptions at Dhaka airport.
Reports suggest that the Indian decision may have been influenced by domestic pressures from Indian garment exporters, who have been struggling with declining export figures. Hassan noted, "If it turns out that the decision was made to appease Indian exporters, that would be unethical behavior. Instead of placing barriers against competitors, Indian exporters should focus on innovation and enhancing productivity."
Moreover, the geopolitical context surrounding this decision is noteworthy. The Indian action coincides with remarks made by Bangladesh’s interim Prime Minister, Mohammed Yunus, during a recent visit to China. He pointed out that seven Indian states rely on Bangladesh for access to the sea, implying a potential leverage for Dhaka. This statement surfaced amid rising tensions between the two countries following the ousting of former Prime Minister Sheikh Hasina last August, a leader known for her strong ties to India.
Indian trade expert Ajay Srinivasan remarked that Bangladesh's plans to establish a strategic base near the narrow land corridor connecting India’s eastern states could be a significant factor influencing India's decision. He noted, "The geopolitical landscape is shifting, and India’s response reflects a need to safeguard its interests."
In light of the escalating tensions, Hassan called for direct diplomatic dialogue with India to resolve the issue of transit shipments. He stressed that both countries benefit from their trade relationship, with India exporting more to Bangladesh than it imports. "We have urged our government to intervene swiftly to resolve this matter. We do not want obstacles to our businesses, and we hope for a resolution through diplomatic channels and formal discussions," he said.
Similarly, Rahman emphasized the importance of negotiation to restore previous facilities. He indicated that the third terminal at Dhaka airport, nearing completion, could alleviate some logistical issues by providing modern facilities capable of handling increased export traffic.
In a related development, Bangladesh announced a non-public response to India’s decision by suspending the import of yarn from India via land crossings, citing the need to protect local industries. Despite this escalation, Rahman remained optimistic about overcoming the crisis, suggesting that improvements in infrastructure would bolster Bangladesh’s export capabilities.
Meanwhile, in a separate but related economic maneuver, Apple Inc. has been transferring a massive shipment of iPhones from India to the United States, totaling approximately 1.5 million devices across multiple flights from March to August 2024. This strategic shift is part of Apple's efforts to navigate the 125% tariff imposed on Chinese imports by the U.S. government.
By activating a 'Green Route' at its Chennai facility, Apple has significantly reduced customs clearance time from 30 hours to just 6 hours. Analysts indicate that this move not only aims to build a strategic stockpile but also reflects a broader strategy to mitigate dependence on Chinese manufacturing, with India now accounting for 20% of iPhone exports to the U.S. market.
Apple’s proactive measures come in response to escalating trade tensions, with the company demonstrating a keen awareness of the geopolitical landscape. The increase in U.S. tariffs from 54% to 125% poses a substantial risk of price hikes for consumers, with estimates suggesting that the price of the iPhone 16 Pro Max could rise from $1,599 to $2,300.
Manufacturing in India is not merely a tactical response to tariffs but also aligns with the “China + 1” strategy adopted by global firms seeking to diversify their supply chains. The introduction of the Green Route exemplifies Apple’s ability to negotiate favorable terms with governments to facilitate operations and streamline supply chains.
However, despite these efforts, 80% of Apple’s supplies still originate from China, leaving the company vulnerable to price fluctuations if the trade war continues. Looking ahead, the potential for renewed tariffs from the U.S. could compel Apple to increase production in India or shift more manufacturing lines to the country.
In conclusion, as both Bangladesh and India navigate these complex economic and geopolitical waters, the need for dialogue and cooperation remains paramount. The evolving landscape presents both challenges and opportunities, underscoring the delicate balance between national interests and regional stability.
