New Delhi, Apr 9 (PTI) India has withdrawn the transshipment facility it had granted to Bangladesh for exporting various items to the Middle East, Europe and various other countries except Nepal and Bhutan.

The move announced on Wednesday through a CBIC circular came against the backdrop of the controversial statement made by head of Bangladesh's interim government Muhammad Yunus in China recently that India's seven northeastern states, which share a nearly 1,600-km border with Bangladesh, are landlocked and have no way to reach the ocean except through his country.

In his address at a business event in which he had also said that Bangladesh was the "only guardian" of the Indian Ocean in the region, Yunus had also invited China to send goods through Bangladesh across the world.

The comments did not go down well in New Delhi. It also drew sharp reactions from political leaders in India across party lines.

The transshipment facility that allowed Bangladesh to use several Indian ports and airports including the Delhi airport for sending its exports to the Middle-East, Europe and many other countries had enabled smooth trade flows for its exports. It was provided by India to Bangladesh in June 2020.

Indian exporters, mainly from the apparel sector, had also earlier urged the government to withdraw this facility to the neighbouring country.

"It has been decided to rescind... circular...dated June 29, 2020, as amended with immediate effect. Cargo already entered into India may be allowed to exit the Indian territory as per the procedure given in that circular," the Central Board of Indirect Taxes and Customs'(CBIC) circular, dated April 8, said.

External Affairs Ministry spokesperson Randhir Jaiswal said the transshipment facility has been withdrawn with effect from April 8.

"The transshipment facility extended to Bangladesh had over a period of time resulted in significant congestion at our airports and ports," he said at his weekly media briefing.

"Logistical delays and higher costs were hindering our own exports and creating backlogs.” Bangladesh has been using several Indian ports and airports for sending its exports to Middle East, Europe and many other countries.

"To clarify, these measures do not impact Bangladesh exports to Nepal or Bhutan transiting through Indian territory," Jaiswal said.

India has exempted Bangladeshi exports to Nepal and Bhutan as such trade facilitation is mandatory for landlocked countries under the framework of provisions of the World Trade Organisation (WTO).

India-Bangladesh relations has nosedived dramatically after Yunus failed to contain attacks on minorities, especially Hindus, in that country.

India’s announcement also came at a time when the US has imposed sweeping tariffs on a number of countries, including India and Bangladesh. There was no immediate reaction from Bangladesh.

The earlier circular had allowed transshipment of export cargo from Bangladesh to third countries using Indian Land Customs Stations (LCSs) en route to Indian ports and airports.

According to trade experts, the decision will help many of the Indian export sectors like apparel, footwear, and gems and jewellery.

Bangladesh is a big competitor of India in the textile sector.

"Now we will have more air capacity for our cargo. In the past, exporters have complained about lesser space due to the transhipment facility given to Bangladesh," Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.

Apparel exporters' body AEPC had earlier urged the government to suspend this order, which allows the transshipment of Bangladesh export cargo to third countries through the Delhi air cargo complex.

AEPC Chairman Sudhir Sekhri had stated that almost 20-30 loaded trucks arrive in Delhi every day, which slows down the smooth movement of cargo, and airlines are taking undue advantage of this.

This leads to an excessive increase in air freight rates, delay in handling and processing of export cargo, and severe congestion at the Cargo Terminal at the IGI Airport, Delhi, resulting in exports of Indian apparel through the Delhi air cargo complex becoming uncompetitive.

"This will help in rationalization of freight rates resulting in less transportation cost to the Indian exporters besides decongesting the airports leading to the shorter transit time to ship the goods," AEPC Secretary General Mithileshwar Thakur said.

Think tank Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said the withdrawal of this facility is expected to disrupt Bangladesh's export and import logistics, 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. Additionally, Nepal and Bhutan, both landlocked nations, may raise concerns about restricted transit access to Bangladesh, especially as this move will hamper their trade with Bangladesh," Srivastava said.

He added that Bangladesh's plans for creating strategic base near Chicken’s Neck area with China's help may have prompted this action.

On the other hand, India always supported Bangladesh cause. India allows one way zero tariff access to Bangladesh goods (all except alcohol and cigarettes) to the vast India market since past two decades.

The India-Bangladesh trade stood at USD 12.9 billion in 2023-24. PTI MPB RR ANU KVK GSN GSN GSN