India Bars Transshipment From Bangladesh To Nepal, Bhutan After Row

The policy fiat, announced by the Ministry of Finance through the Central Board of Indirect Taxes and Customs (CBIC), has immediate effect and brings an end to the practice of using Indian Land Customs Stations (LCSs) for transshipment to third countries from Bangladesh. The move effectively rescinds the provisions of Circular No. 29/2020-Customs. 

The controversial statement about Bangladesh's role as a "guardian of the Indian Ocean" came amid other anti-Indian statements by various members of Bangladesh’s interim government. 

Analysts said the Indian government, responding to these concerns, has decided to halt the transshipment of goods through Bangladesh to Nepal and Bhutan, citing the need to reassess trade practices in light of the evolving geopolitical situation.

Transshipment Stops

Under the now-rescinded circular, goods destined for Nepal and Bhutan had been transshipped through Indian land ports via Bangladesh, a process that will no longer be allowed. However, the new circular clarifies that cargo that has already entered India may still exit the country in accordance with the procedures previously outlined.

This policy shift marks a new chapter in India’s approach to regional trade and customs regulation. The government has urged stakeholders facing difficulties with the new directive to submit their concerns for further clarification.

The move is seen as part of India’s broader effort to assert its control over trade routes, and mitigate concerns over the influence of neighbouring countries in the region’s logistics and transportation networks. 

Global Trade Research Initiative, in a note said, “The withdrawal of this facility is expected to disrupt Bangladesh’s export and import logistics, particularly with Bhutan, Nepal and Myanmar, which depend on Indian infrastructure for third-country trade.

The previous mechanism had offered a streamlined route through India, cutting transit time and cost. “Now, without it, Bangladeshi exporters may face logistical delays, higher costs, and uncertainty,” the note added.

Stakeholders: Won't Affect Nepal, Bhutan

Top External Affairs Ministry officials said, “We still allow duty-free access to Indian markets for Bangladesh, but this move is to assert and underline that while we want good neighbourly relations, we cannot be taken for granted and turned into a punching bag for someone’s domestic politics.”

Trade officials pointed out that most Nepali and Bhutanese imports were anyway going through Haldia and Kolkata ports in West Bengal, and that this move wouldn't make much of a difference to them.

Nepal and Bhutan's imports from Bangladesh are a negligible component of the total goods imported by these countries.