India's port restrictions on Bangladesh imports signal strategic trade rebalancing, hit $770M commerce

India’s decision to restrict the ports of entry of several goods from Bangladesh will impact 42% of bilateral import worth $770 million.

Commerce Ministry’s Directorate General of Foreign Trade (DGFT) had on May 17 notified that import of readymade garments from Bangladesh to India can happen only through Nhava Sheva and Kolkata seaports and not through the land. India imports $ 618 million worth of readymade garments from Bangladesh. The notification came into effect immediately.

Indian manufacturers have long expressed concern over the uneven playing field in readymade garments as they pay a 5% GST on locally sourced fabric, while Bangladeshi firms import fabric duty-free from China and receive export incentives for sales to India—giving them an estimated 10–15% price advantage. The move to restrict port of entry will increase the logistics cost of Bangladesh garments now.

Top global brands like H&M, Zara, Primark, Uniqlo, and Walmart source apparel from Bangladesh, some of which enters India’s domestic market.

Similarly, the notification said import of fruit/ fruit flavoured and carbonated drinks; processed food items; cotton and cotton yarn waste; plastic and PVC finished goods, except pigments, dyes, plasticisers and granules that form input for own industries; and wooden furniture, (worth $153 million collectively) shall not be allowed through any Land Customs Stations (LCSs)/ Integrated Check Posts (ICPs) in Assam, Meghalaya, Tripura and Mizoram and LCS Changrabandha and  Fulbari,  in West Bengal.

The trade measure did not emerge in isolation, says Ajay Srivastava, founder of Delhi based think tank Global Trade Research Initiative (GTRI). “Since late 2024, Bangladesh has imposed a series of restrictions on Indian exports. These include an April 2025 ban on Indian yarn imports through five major land ports, tighter curbs on rice shipments, and import bans on dozens of Indian goods—from paper and tobacco to fish and powdered milk. Adding to the friction, Dhaka introduced a transit fee of 1.8 taka per tonne per kilometre on Indian goods moving through its territory. These cumulative actions, along with operational delays and tightened port inspections, have hampered Indian exporters and triggered calls for a calibrated response”, he said.