India halts Bangladesh’s export route after Yunus calls Northeast ‘landlocked’, invites China

In a significant diplomatic retaliation, India has withdrawn a crucial transshipment facility extended to Bangladesh, days after the neighbouring country’s interim leader Muhammad Yunus referred to India’s Northeast as a “landlocked” region and urged China to expand its economic reach into the area.

The facility, originally granted in June 2020, allowed Bangladeshi goods to transit through Indian territory — including ports, airports, and land customs stations — to reach third countries like Nepal, Bhutan, and Myanmar. This arrangement not only made trade more efficient for Bangladesh but also marked a phase of growing regional connectivity under India’s “Neighbourhood First” policy.

However, the Ministry of Finance, through the Central Board of Indirect Taxes and Customs (CBIC), officially rescinded the 2020 circular on April 8, 2025. While cargo that has already entered India will be allowed to exit as per existing procedures, the facility stands cancelled for any future consignments. This move is widely seen as a direct diplomatic response to Yunus’s remarks in China.

During a high-profile visit to Beijing, Yunus called India’s Northeast “landlocked” and lacking ocean access, positioning Bangladesh as the “only guardian of the ocean” for the region. He advocated that this geographical reality creates a massive opportunity for China to economically integrate with India’s eastern region via Bangladesh. The comments triggered sharp reactions from New Delhi.

External Affairs Minister S. Jaishankar responded sternly, underlining that India’s Northeast is far from isolated. “We have the longest coastline in the Bay of Bengal, almost 6,500 km. Our Northeast is being developed as a key connectivity hub for BIMSTEC, ASEAN, and beyond,” he said, dismissing Yunus’s claims as misleading and unhelpful.

Experts believe this policy reversal may also yield economic gains for Indian industries that directly compete with Bangladesh. Sectors like textiles, footwear, and jewellery — where Bangladesh has held a strong export advantage — could see a resurgence as Bangladeshi access to neighbouring markets becomes logistically costlier.

Diplomatic observers caution that this move, while economically sound for India, could deepen existing strains between New Delhi and Dhaka, especially under Yunus’s interim leadership, which appears more inclined toward Chinese alignment.