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Recent geopolitical tensions are sending shockwaves through South Asia’s trade landscape, as India imposes new restrictions on Bangladeshi firms. The fallout is reshaping regional logistics and may have lasting effects on the economic future of both countries, and the broader global supply chain.
Disruptions and Ripple Effects
Tensions escalated sharply when India revoked a transshipment facility that had allowed Bangladeshi goods, especially garments to move through Indian land ports en route to third countries. Effective April 8, 2025, the decision disrupted a crucial logistics artery supporting Bangladesh’s $47 billion apparel industry, which heavily relies on Indian infrastructure for cost-efficient, timely deliveries.
In a retaliatory move, Bangladesh shut down several land ports connected to India and suspended imports of raw yarn, a critical input for its garments sector. This back-and-forth has severely impacted small and medium-sized enterprises (SMEs) in both countries, triggering shipment delays, inflated freight costs, and mounting logistical headaches.
The impact doesn’t end at the border. Landlocked neighbors like Nepal and Bhutan, who depend on the India-Bangladesh trade corridor, are now facing delays and diversions. Rerouted cargo through longer, more expensive alternatives threatens to undo years of progress toward a more connected and collaborative South Asian trading ecosystem.
Bangladesh’s Resilience Amid Disruption
Amid these disruptions, Bangladesh is adapting quickly. Exporters are turning to air freight to ensure continuity, especially for high-priority shipments to Europe and the U.S. While costlier than traditional modes, air freight offers the reliability and speed needed during geopolitical uncertainty.
Beyond tactical fixes, Bangladesh is accelerating strategic investments in its own infrastructure, particularly at ports like Chattogram and Payra – and exploring transit partnerships with other neighbors to reduce reliance on Indian routes. These moves reflect a broader intent: to future-proof its export engine and maintain competitiveness on the global stage.
Regional Realignment and the Road Ahead
For India, balancing national security priorities with economic pragmatism will be key to preserving its regional leadership. For Bangladesh, strengthening alternative pathways and global partnerships will be critical to safeguarding industrial growth.
If there’s a silver lining, it’s this: these trade tensions may serve as a catalyst for South Asia to build more resilient, multi-modal supply networks, ones less vulnerable to political shifts and more attuned to long-term economic sustainability. As political winds shift, South Asia stands at a crossroads, either deepen its divides or build a trade network resilient enough to weather them.
