India has withdrawn a facility that allowed the transshipment of export cargo from Bangladesh to third countries using Indian land customs stations, according to a government circular issued by the Central Board of Indirect Taxes and Customs on Tuesday, The Indian Express reported.

The facility, introduced in June 2020, enabled Bangladesh to route export consignments through Indian land customs stations to Indian ports and airports for onward shipment to nations such as Bhutan, Nepal and Myanmar.

The latest circular, dated April 8, stated": “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 move comes amid increasing complaints from Indian exporters in the apparel sector, who had called for the termination of the facility, and amid wider concerns about regional trade competitiveness.

The development also comes days after Bangladesh leader Muhammad Yunus’ remarks about Dhaka being the ‘only guardian of the ocean’ in the region sparked a furore in India.

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

The Apparel Export Promotion Council had also pushed for the suspension of the provision. AEPC Chairman Sudhir Sekhri told PTI: “Almost 20 to 30 loaded trucks arrive in Delhi every day, which slows down the smooth movement of cargo, and airlines are taking undue advantage of this.”

Sekhri added that it led to rising air freight rates, delays in handling, and severe congestion at the Delhi airport cargo terminal, making Indian apparel exports uncompetitive.

Ajay Srivastava, founder of the Global Trade Research Initiative and former trade officer, told The Indian Express that the move is likely to disrupt logistics for Bangladesh’s exports and imports that rely on Indian infrastructure.

Srivastava also warned that the decision could raise concerns about India’s World Trade Organization obligations. “According to WTO rules, particularly Article V of the General Agreement on Tariffs and Trade (GATT) 1994, all WTO members are required to allow freedom of transit for goods moving to and from landlocked countries,” he explained. “This means such transit must be unrestricted, free from unnecessary delays, and not subject to transit duties.”

He added that the WTO Trade Facilitation Agreement also supports streamlined and fair cross-border procedures. India and Bangladesh are both members of the WTO.

The timing of the decision coincides with strained regional ties. During a visit to China from March 26 to 29, Muhammad Yunus, chief adviser to Bangladesh’s interim government, said: “The seven states of eastern India, known as the Seven Sisters, are a landlocked region. They have no direct access to the ocean. We are the only guardian of the ocean for this entire region.”

Yunus had added: “This opens up a huge opportunity. It could become an extension of the Chinese economy… Build things, produce things, market things, bring goods to China and export them to the rest of the world.”

His remarks, seen as an assertion of Dhaka’s leverage over India’s North East, drew sharp responses in Delhi. Assam Chief Minister Himanta Biswa Sarma called the statement “offensive” and “strongly condemnable” and said it highlighted the “persistent vulnerability narrative associated with India’s strategic ‘Chicken Neck’ corridor”.

India’s northeastern states (Assam, Arunachal Pradesh, Manipur, Meghalaya, Nagaland, Mizoram, Tripura and Sikkim) share borders with Bangladesh, China, Myanmar, Bhutan and Nepal. The region is connected to the rest of India through the narrow 22-kilometre-wide Siliguri Corridor, known as the “Chicken Neck”.