India terminates transshipment facility for Bangladesh; move may benefit apparel cos competing against Dhaka

New Delhi: India has terminated the transshipment facility that allowed export cargo from Bangladesh to third countries to use its land customs stations en route to ports and airports. The move, at the behest of exporters, is expected to benefit export sectors such as apparel that face stiff competition from Bangladesh.

"We will have more air capacity for our cargo. In the past, exporters have complained about lesser space due to the transshipment facility given to Bangladesh," said Ajay Sahai, director general, Federation of Indian Export Organisations.

The transshipment facility provided to the neighbouring nation in 2020 aided movement of trade to other countries.

On withdrawal of the transshipment facility for Bangladesh, external affairs ministry spokesperson Randheer Jaiswal said the facility extended to Bangladesh had, over a period of time, resulted in significant congestion at the country's airports and ports. He said logistical delays and higher costs were hindering the nation's exports and creating backlogs.

He clarified that the measure does not impact Bangladesh's exports to Nepal or Bhutan transiting through Indian territory.

The Apparel Export Promotion Council had earlier petitioned the government to suspend this facility, saying it led to congestion and inflation of cargo rates by airlines.

"It has been decided to rescind... circular... dated June 29, 2020, as amended with immediate effect," a Central Board of Indirect Taxes and Customs circular issued late Tuesday said, adding that the cargo in transit may be allowed to exit the Indian territory as per the specified procedure.

Bangladesh's exporters will now be required to comply with stringent provisions as prescribed in Sea Cargo Manifest and Transhipment Regulations, 2018, officials said. Transshipment facilities mainly meant Bangladesh's garment exports to the west and were extended to Dhaka in mid-2020, said people familiar with the matter.

India-Bangladesh trade stood at $ 12.9 billion in 2023-24.

Bangladesh may now try to use Sri Lanka's port for transshipment but any such move would incur huge cost, said the people cited earlier.