India Restricts Jute Imports from Bangladesh via Land Routes Amid Rising Diplomatic Strains
- MGMMTeam
- Jun 28
- 4 min read
In a significant trade policy shift, India has banned the import of various jute-related goods from Bangladesh through land borders, citing strategic, economic, and political concerns. The decision comes at a time of growing friction between the two South Asian neighbours, raising concerns about the future of their once-strong bilateral trade relationship.
Policy Change and Its Scope
The Directorate General of Foreign Trade (DGFT) issued a notification restricting the entry of jute yarn, flax tow, bast fibres, and woven fabrics originating from Bangladesh. These products, which were previously transported via multiple land border crossings—especially through the Petrapole–Benapole route—will now be allowed entry only through the Nhava Sheva seaport in Maharashtra. This restriction is aimed at tightening the inflow of textile-related imports and is expected to impact Bangladesh’s export volumes significantly.
While the ban applies to all land ports, certain exceptions remain. Imports destined for landlocked neighbours like Nepal and Bhutan will still be permitted via Indian territory. However, such shipments cannot be diverted for re-entry into the Indian market, thereby closing any potential loopholes.
Backdrop of Escalating Trade Controls
This latest restriction follows a series of measures taken by India over the past few months that appear to be targeting key sectors of Bangladesh’s export economy. Earlier in April and May, India revoked Bangladesh’s transshipment privileges and imposed seaport-only restrictions on various goods, including readymade garments, processed food items, and PVC products.
Although India has not explicitly stated that these measures are retaliatory, they coincide with Dhaka’s imposition of tariffs and restrictions on Indian exports of yarn, rice, sugar, and other staples. Analysts believe these mutual limitations signal the beginning of a tense and more regulated phase of trade between the two nations, which have traditionally enjoyed close economic and diplomatic ties.
Political and Geopolitical Undercurrents
Tensions between New Delhi and Dhaka have been exacerbated by recent political developments in Bangladesh. The rise of an interim leadership headed by Muhammad Yunus, and his overtures toward China, have not been received positively in India. Yunus’s visit to Beijing, where he reportedly discussed regional connectivity and trade corridors with Chinese officials, raised alarms in New Delhi about a potential strategic realignment in South Asia.
India is also reportedly concerned about the increasing violence against Hindu minorities in Bangladesh, which has become a domestic political issue. These developments, coupled with Bangladesh’s moves to restrict Indian exports, are believed to have influenced India’s latest decision to curtail imports through overland routes.
Economic Repercussions for Both Nations
India and Bangladesh maintain a strong trade relationship, with bilateral trade reaching approximately USD 12.9 billion in FY 2023–24. India’s exports to Bangladesh account for the lion’s share, while imports—largely comprising jute, textiles, and garments—remain relatively modest.
The redirection of Bangladeshi goods to maritime channels could slow down delivery timelines, increase transportation costs, and hurt smaller exporters who rely heavily on land routes for cross-border trade. On the Indian side, however, the restrictions are expected to open new opportunities for domestic jute and textile manufacturers. Industry observers estimate that this move could generate ₹1,000–2,000 crore in additional business for Indian firms by reducing reliance on cheap imports and incentivizing local production.
Disruption to Border Economies
The fallout from the policy has already begun to manifest at key land ports. At the Petrapole border, where more than 600 trucks once crossed daily, the number has plummeted to under 200, according to reports. Labourers, customs agents, truck operators, and small traders are among the hardest hit, many of whom depend on the daily movement of goods to sustain their livelihoods.
These disruptions have triggered concerns about a potential economic slowdown in border towns and about the welfare of thousands of workers who may now be left without stable incomes. For many of these communities, the free flow of trade was not only a source of economic activity but also a symbol of regional cooperation.
Strategic Objectives Behind the Move
From a strategic standpoint, India’s decision aligns with its broader goals of curbing Chinese influence in the region and strengthening domestic industries under its “Atmanirbhar Bharat” (self-reliant India) initiative. There is also speculation that India wants to clamp down on the indirect entry of Chinese synthetic textile fibres into its market via Bangladesh.
By limiting land-route access, India gains greater control over inspection, logistics, and quality assurance, which is harder to enforce across porous and often-chaotic border checkpoints. Routing goods through the Nhava Sheva port ensures more structured regulation and reduces the chances of smuggling or under-invoicing—both common concerns in land-based trade.
Conclusion: The Road Ahead
India’s decision to ban land-route imports of jute and textile items from Bangladesh is more than just a trade regulation—it is a reflection of the shifting dynamics in regional geopolitics, economic nationalism, and mutual mistrust. While it may temporarily benefit Indian manufacturers and bolster port operations, the long-term consequences could be more complex.
If diplomatic tensions continue to mount and reciprocal restrictions persist, the region may witness a breakdown in one of South Asia’s most successful trade partnerships. To avoid this, both countries will need to engage in dialogue, revisit their bilateral trade frameworks, and ensure that short-term political calculations do not undermine decades of economic progress.
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