Two years after August 5, 2024, the relationship between India and Bangladesh remains strained.
The two countries continue to maintain the trade restrictions they imposed on each other. India's cancellation of the transshipment facility in April 2025, its port restrictions of May 2025 and its jute notifications of June and August 2025 all remain in place, as does Bangladesh's land-port ban on Indian yarn.
Our commerce minister and India's high commissioner discussed reopening the land ports in Dhaka on August 24. A month later, India raised its anti-dumping duties on our jute, and four days after that, India’s trade remedies body recommended countervailing duties on top of them.
Meanwhile, Dhaka is reviewing 101 agreements and memoranda signed under the previous government. The two India-specific economic zones at Mirsarai and Mongla were cancelled in October 2025, with Mongla signed over to a Chinese company eight months later.
The Ganges Water Sharing Treaty expires this December. Dhaka is yet to negotiate a renewal. Sheikh Hasina remains in Delhi, convicted and sentenced to death in absentia in November 2025, and the extradition request Dhaka sent in December 2024 has not been answered. How are these actions affecting trade between the two countries?
India's exports to Bangladesh had already declined from a peak of $16.13 billion in fiscal 2021-22 to $11.07 billion by March 2024, a drop of 31%. This happened under the Awami League government, as Bangladesh ran short of dollars and restricted the opening of letters of credit.
Since that fall, India’s trade with Bangladesh has grown again. Our revenue board puts imports from India at $10.96 billion in FY2025-26, up 13.9% and the highest in four years. India’s own submission to the UN trade database puts its exports to Bangladesh at $11.25 billion in calendar 2025.
The data provides two perspectives. Read one way, India’s trade has grown since the decline during the Awami League tenure. Read another, it remains a third below the peak. India has recovered ground since the rupture without recovering what it lost before it, and it has done so while our economy slowed.
While India’s trade with Bangladesh remains below its peak, the flow of visitors from Bangladesh to India remains at a fraction of what it used to be. Bangladeshi visitors to India fell from 2.12 million in 2023 to about 470,000 in 2025. The number of medical visas issued has declined from between 5,000 and 7,000 a day to fewer than 500.
The effect is more direct in Kolkata, where Apollo Hospital’s revenue from Bangladeshi patients fell from Rs 320 crore to Rs 220 crore. But while the hospital registered fewer patients from Bangladesh, its international revenue rose 28% on the back of patients from Iraq, Ethiopia and Central Asia.
With land ports facing restrictions, shipments were rerouted through the sea. Petrapole recorded its best year ever in 2024. One year later, trade fell 20.5% in value and 27.9% in cargo after the restrictions were imposed. Benapole's revenue fell from 7,029 crore taka to 6,559 crore taka. Akhaura recorded no imports between February and June 2026.
In contrast, Chattogram's imports from India in July 2025, compared with July 2024, rose 213% by volume and 80% by value, while the land ports lost 26%. The earnings moved from clearing agents, transporters and day labourers at the land ports to shipping lines in Chattogram.
Dhaka closed five land ports to Indian yarn in April 2025, at the millers' request, to protect domestic spinners. But yarn imports from India rose 137% year on year as the sea route from Mundra absorbed the volume. Meanwhile, at least 50 of our spinning mills closed, 50 more cut production and 12,000 crore taka worth of yarn sat unsold. We restricted our borders, but the yarn arrived anyway while the mills we meant to save closed.
On April 8, 2025, India withdrew the transshipment facility it had granted for Bangladeshi ready-made garments in June 2020. Under that facility, our garments travelled by road to Delhi and flew out from there. Delhi has far more flights and belly space than Dhaka, so the rate there was about $1.20 a kilogramme against $3.00 out of Dhaka.
We were renting India’s air connectivity in the years when we should have been building our own.
The loans are a harder test. India lent us about $7.3 billion across three credit lines from 2010, at 1% interest with 20 years to repay, for some 40 railway, road, port and power projects. That was the cheapest money available to us.
But only $1.8 billion was ever drawn. We struck 11 projects off the list in March 2025, and last October we stopped using Indian credit altogether for the Khulna-Darshana railway, the Bogura-Sirajganj line and the Mongla port upgrade. We are yet to find another financier for the projects, and none has started, while we are repaying $344 million on the first credit line.
The data shows that the strained relationship is hurting Bangladesh. But are these costs extraordinary? The case of Adani shows that Bangladesh stood to gain more than this is costing us had we used the rupture as an opportunity to reduce dependencies on India and exit hostile agreements.
Adani built a 1,600 MW plant in Jharkhand exclusively to serve Bangladesh. It sold us the output under an agreement signed in November 2017 that runs for 25 years. In FY2024-25, we paid 14.86 taka for a unit of that power. Over the same year, NVVN, an Indian state supplier, charged us 7.58 taka per unit.
Our national review committee examined the contract in January and found the tariff about 50% higher than it should be, with Indian corporate taxes passed on to our bill and a late-payment surcharge of 27% a year. Bangladesh continued the onerous agreement instead of pushing for a revision.
The Godda plant was built for Bangladesh and has no other buyer. In principle, this means Adani cannot sell that power to anyone else if we do not buy it. But we did not use this as leverage.
We cleared the arrears with a single payment of $437 million, posted a sovereign guarantee, kept paying $90 million to $100 million every month and left the tariff exactly where it was. The government said in February that it intended to revise the contract. Seven months on, the tariff remains unchanged.
Adani, for its part, halved the supply in October 2024 to collect what it was owed. They used their leverage; we have not used ours.
We could learn from the trade-off we made on cotton, the key raw material for our ready-made garments industry.
India’s share of Bangladesh’s raw cotton imports declined from 23% in 2023-24 to 17% the next year. During that period, our share from Brazil increased from 17% to 23% and from West Africa from 37% to 41%.
American, West African, Brazilian and Indian lint were all within a cent of each other at 82 to 83 cents a pound. The shift from India therefore did not cost us anything in dollar terms.
Before the shift, the industry maintained that it had no alternative on lead time because Indian cotton came through Benapole in a week. That assumption proved wrong. Brazilian and West African cotton is sold while still at sea or drawn from bonded warehouses in Singapore, Port Klang and Colombo. The US Department of Agriculture's Dhaka office reports that cotton from those warehouses reaches Bangladesh in seven days.
The shift led us to a viable alternative that had been available all along. So who is paying the price?
India has lost no ground since the rupture, though it has not regained what it lost before it. Our imports from India are the highest in four years, while India’s exports to us are still a third below where they stood in 2021-22. Trade has shifted from land ports to seaports, and so have the earnings.
The balance remains roughly where it was, while Bangladesh still has an opportunity to reposition itself. Cotton has shown that we can move a major input to another supplier without paying a premium.
Three negotiations remain, and all three are difficult. The Ganges treaty expires this December, and we have tabled nothing. We are the only buyer of Godda’s power, and we have still not negotiated the tariff. The Delhi air route remains closed to us.
India might be holding each of these as a pressure point. Bangladesh could reduce that pressure by engaging with alternative trade partners or negotiating better terms with India.
We are doing neither.
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