India withdraws key trade facility for Bangladesh after Dhaka’s pitch for China in Northeast

The facility, introduced in June 2020, enabled Dhaka’s exports to move smoothly to neighbouring countries like Nepal, Bhutan and Myanmar.

The Central Board of Indirect Taxes and Customs (CBIC) issued a circular on April 8 stating that the provision is rescinded immediately, reported India Today.

However, cargo already in transit will be allowed to exit Indian territory under the previous procedure.

Dhaka's China pitch sparks diplomatic row

The move came soon after Muhammad Yunus, Chief Adviser to Bangladesh's interim government, described India’s Northeast as "landlocked" and promoted Bangladesh as its only maritime gateway.

In comments made during a four-day visit to China, Yunus urged Beijing to expand its economic presence in the region.

"The Seven Sisters — the eastern part of India — are landlocked. They have no way to reach out to the ocean. This opens up a huge possibility. This could be an extension of the Chinese economy," Yunus said at a high-level roundtable in Beijing.

India hits back, says Northeast is not landlocked

External Affairs Minister S Jaishankar strongly rebutted Yunus’s remarks, asserting that India’s vision of cooperation is inclusive and not based on selective convenience.

“We have the longest coastline in the Bay of Bengal, almost 6,500 km. Our Northeast is emerging as a connectivity hub for BIMSTEC, with a myriad of roads, railways, waterways, power grids and pipelines,” he said.

Exporters may gain from reversal

Trade analysts believe the withdrawal of the facility could benefit several Indian export sectors such as textiles, footwear, and gems and jewellery — all of which face tough competition from Bangladesh, particularly in garments.

While the government has not officially cited Yunus’s comments as the reason behind the move, the timing has led to speculation that New Delhi is signalling its displeasure over Dhaka’s positioning of China as a regional economic anchor.