India's decision to curb Bangladeshi exports via land ports aimed at ensuring fairness: Sources

India's decision to curb Bangladeshi exports of ready-made garments and several other consumer goods through land ports is aimed at ensuring fairness and equality in bilateral trade, government sources said on Sunday. India's trade relationship with Bangladesh will be based on "reciprocal terms" and the decision on restricting exports of ready-made garments from the neighbouring country is in response to Dhaka imposing similar trade barriers on Indian yarn and rice, they said. India on Saturday decided to allow entry of ready-made garments from Bangladesh only through Kolkata and Nhava Sheva sea ports and barred imports of a range of consumer items through land transit posts in the Northeast.

Besides ready-made garments (RMG), plastics, wooden furniture, carbonated drinks, processed food items, fruit flavoured drinks, cotton and cotton yarn waste will not be allowed to enter India through land customs stations and check posts in Meghalaya, Assam, Tripura and Mizoram, and Phulbari and Changrabandha in West Bengal, according to a government notification.

The new restrictions for Bangladeshi consumer goods were imposed five weeks after New Delhi ended a nearly five-year-old arrangement for trans-shipment of Bangladeshi export cargo to third countries via Indian airports and ports.

Land port restrictions imposed by India on select exports from Bangladesh to the Northeast region are expected to restore equality in the relationship, the sources said.

While India had hitherto allowed all exports from Bangladesh without restrictions, the transit and market access to the Northeast had been restricted by Bangladesh, they said. This measure by India restores equal market access for both countries, the sources added. New Delhi's position is that the relationship with Bangladesh will be on reciprocal terms, the sources said.

"Restricting imports of ready-made garments from Bangladesh through only two seaports is a reciprocal measure to Bangladesh imposing similar trade restrictions on Indian yarn and rice as well as selectively enhancing inspection on all Indian goods exported to Bangladesh," said one of the source.

The move on restricting entry of ready-made garments through land ports assumed significance as it is expected to adversely impact the sector.

Bangladesh is a major global exporter of ready-made garments, and the value of its exports in the sector was estimated at USD 38 billion in 2023.

Its annual RMG exports to India is estimated at around USD 700 million and 93 per cent of the RMG shipments enter India through land ports.

New Delhi is also opposed to Bangladesh considering the Northeastern region as being its captive market. "Bangladesh needs to realise that it cannot cherry pick terms of bilateral trade solely for its benefit or assume Northeast is a captive market for its exports, while denying it market access and transit," said another source.

As underlined by Prime Minister Narendra Modi, the Northeast is integral to BIMSTEC regional grouping.

"The equal market space now available in the resource-rich Northeast is expected to give a fillip to manufacturing and entrepreneurship in the region under the Atmanirbhar Bharat schemes and policies," the second source said.

Besides India and Thailand, the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) comprises Sri Lanka, Bangladesh, Myanmar, Nepal and Bhutan.

There are 11 land transit points in the Northeast for trade between India and Bangladesh. Out of them, three are in Assam, two in Meghalaya and six in Tripura.

India had previously permitted export of Bangladeshi goods through all land trading points and seaports without undue restrictions.

However, Bangladesh continued to impose port restrictions on Indian exports at Land Customs Stations (LCS) and Integrated Check Posts (ICP) bordering the Northeastern region.