“Don’t get involved in a trade war with us; India signals to Bangladesh as it grows closer to Pakistan.”

India has expressed deep concern over Bangladesh’s recent trade policies and statements.

However, the Indian government has indicated that it will refrain from immediate tit-for-tat responses, aiming to prevent further deterioration in bilateral relations.

India has made it clear that it does not wish to get entangled in any form of trade war with Bangladesh,

even though recent signals from Dhaka regarding trade have not been very positive.

Recently, Bangladesh imposed a ban on yarn imports from India through land borders.

Prior to this, India had withdrawn the trans-shipment facility it had granted to Bangladesh in 2020.

Indian government sources clarified that the decision to end the trans-shipment facility was purely to reduce congestion at Indian ports and airports.

India also ensured that this move would not impact Nepal and Bhutan’s exports from Bangladesh that transit through Indian territory.

Amid a series of anti-India statements and trade decisions from Dhaka, Indian Prime Minister Narendra Modi met Bangladesh’s Chief Advisor Mohammad Yunus in Bangkok.

During the meeting, Modi urged Yunus to avoid statements that could further strain the atmosphere.

Suspension of Trans-shipment Facility

The Indian side believes that Bangladesh’s interim government had already begun taking steps that could harm bilateral trade ties even before the suspension of the trans-shipment facility.

In March, Bangladesh decided to close three land borders with India and banned yarn imports.

Earlier, in January, Bangladesh had announced tighter surveillance at Benapole Custom House, a move India viewed as restrictive.

Bangladeshi textile manufacturers have already warned their government that halting yarn imports from India could be suicidal for the export industry.

India supplies raw materials like yarn essential for Bangladesh’s textile production, and this ban is directly affecting the industry.

Growing Proximity with Pakistan

While Bangladesh tightens trade with India, it has also resumed direct trade with Pakistan.

In February, it decided to import 50,000 tons of rice from Pakistan through the Trading Corporation of Pakistan (TCP).

These developments have heightened India’s concerns, especially as signs of growing radicalism in Bangladesh and its increasing closeness with Pakistan pose regional security challenges.

India considers Pakistan a hub of global terrorism.

Sources suggest Pakistan is now looking to expand its exports to Bangladesh. After years, high-level talks have resumed between the two countries.

Pakistan’s Foreign Secretary Amna Baloch is scheduled to visit Dhaka on Thursday, followed by Foreign Minister Ishaq Dar next week.

India has stated that it prefers to keep trade separate from politics and supports stability and cooperation.

However, it remains cautious about Bangladesh’s policies and its warming ties with Pakistan. The coming weeks will be crucial in determining the direction of Dhaka’s policy.

India’s Strategy: Restraint and Caution

India has conveyed its desire to avoid a trade war with Bangladesh. Government sources emphasized that India values the historical, political, and economic ties between the two nations.

In 2023–24, bilateral trade stood at $12.9 billion, with India offering Bangladesh unilateral duty-free access on many products.

A spokesperson from India’s Ministry of External Affairs stated, “India is committed to promoting regional cooperation and connectivity,

but such facilities are provided based on national security and mutual respect.” Experts believe India’s approach sends a clear message to Bangladesh.

it will not tolerate hostile unilateral moves but also seeks to avoid escalating tensions.

Regional and Global Context

This situation is unfolding amid rising global trade tensions. Recently, the U.S. imposed retaliatory tariffs on several countries,

including India and Bangladesh, complicating regional trade further. Additionally, the growing closeness between Bangladesh and Pakistan is a concern for India.

Visits by Pakistan’s Foreign Secretary Amna Baloch and Foreign Minister Ishaq Dar to Dhaka have further fueled speculation about shifting regional alliances.

Analysts believe Bangladesh’s recent trade actions are influenced by internal political dynamics ahead of upcoming elections.

India is closely monitoring whether these decisions are temporary or part of a long-term policy shift.

Despite tensions, informal trade through border markets (haats) continues, showing grassroots-level interdependence.

Indian exporters have expressed concern over sudden restrictions, affecting their supply chains and revenues.

Bangladesh’s move to engage with Pakistan comes at a time when Dhaka is diversifying its trade partnerships.

Strategic observers see a potential shift in South Asia’s geopolitical alignments if Dhaka and Islamabad deepen ties.

India is expected to use diplomatic backchannels to resolve issues without making public confrontations.

The South Asian Association for Regional Cooperation (SAARC) framework may also play a role in mediating tensions.

Some Bangladeshi industrial groups are lobbying their government to reconsider import bans from India.

There are reports of logistical delays and increased costs for Bangladeshi garment exporters due to the yarn ban.

Indian businesses are exploring alternative export markets to offset losses from Bangladesh’s restrictions.

India’s northeastern states, which rely heavily on trade with Bangladesh, may face economic ripples.

China is also increasing its economic footprint in Bangladesh, which complicates India’s regional strategy.

Observers note that rising fuel and food prices globally may be pushing Bangladesh toward cheaper import sources.

India may consider offering fresh trade incentives or soft power diplomacy to reset ties if tensions ease.

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