Navigating New Barriers: What Bangladesh Can Do in Response to India’s Trade Curbs

Recent weeks have seen New Delhi impose a series of trade restrictions on imports from Bangladesh.

On 27 June 2025 India’s commerce ministry announced that jute and allied fibre products from Bangladesh will no longer enter via land or most sea ports – only Mumbai’s Nhava Sheva port will remain open for them. This follows earlier curbs on 17 May on apparel, plastics and other goods. India’s stated rationale is to protect its farmers and mills from “dumped” Bangladeshi exports and to curb alleged subsidy benefits. But from Dhaka’s perspective, the lack of communication and reciprocal moves (like removing Bangladesh’s transit privileges) suggest a politicized dispute. 

Nonetheless, it is important to keep the situation in perspective. India is Bangladesh’s largest trade partner, but Bangladesh’s total exports are far more concentrated in Western markets – the US and EU account for the lion’s share of apparel demand. And even in Bangladesh, sectoral diversity (beyond garments and jute) is growing: home textiles, leather goods, pharmaceuticals and light engineering products have been rising faster than global counterparts. In other words, while India’s curbs are unwanted, they come at a time when Bangladeshi industry has many other engines of growth. The challenge is to reorient and accelerate those engines.

Expanding and Diversifying Export Markets

The most immediate policy prescription is clear: accelerate market diversification. Bangladesh cannot rely on one neighboring market when relations are rocky. Already in recent years the country has made inroads into new destinations. For example, apparel exports to the European Union surged (up 13% in late 2024) and remain the largest single market. The UK and US are also major buyers, and both have signaled continued openness: the UK has assured Bangladesh of duty-free access for 92% of its exports until 2029, and is encouraging Bangladesh to expand beyond garments into diversified goods like agro-products and manufactured textiles. This “Developing Country Trading Scheme” explicitly urges Dhaka to add new categories (e.g. footwear, home textiles, jute products) for UK import. 

Likewise, the EU remains attractive under “Everything but Arms” preferences. Bangladesh’s exporters should step up promotion in Europe, emphasizing the country’s improving compliance and green credentials. The US, despite new tariff threats, still buys over $10 billion of Bangladesh RMG annually – and there too Bangladesh could push for a share of any relocation of sourcing from China or Vietnam. Other Asian markets offer promise: China and South Korea are increasingly importing Bangladeshi knitwear and fabrics, and even Japan and Canada could be targeted by high-quality garment clusters. Emerging markets in Africa and Latin America also deserve attention. Bangladesh’s trade missions and chambers of commerce should organize buyer-seller meets, leverage e-commerce platforms, and use high-level summits to showcase non-garment items.

In particular, jute and jute goods offer an export opportunity if rebranded. Traditionally raw jute went to India and much jute home-ware to Europe and Turkey. Bangladesh can now deepen access to these markets – the EU and US have “eco-friendly product” niches keen on jute bags, mats, carpets and furniture. 

Proactive Policy Measures

To implement these strategies, concrete policy actions are needed now. First, the export stimulation scheme (cash incentives) that used to benefit apparel was curtailed; authorities could reintroduce or boost support for sectors hit by India’s curbs, especially jute goods and allied industries. 

Second, Bangladesh should strengthen institutional support for exporters. The commerce ministry and Bangladesh Export Promotion Bureau can launch a “Market Diversification Cell” to help firms enter new countries – offering market research, sharing buyer contacts, and negotiating trade deals.

Third, diplomatic outreach must continue in parallel. The government’s decision to engage India’s commerce secretary is prudent. At the same time, Bangladesh can appeal to friendly governments and institutions. Multilateral forums like the WTO or UN ESCAP could be venues to raise concerns about non-tariff barriers. 

Fourth, regional cooperation agreements should be revived. Bangladesh should push India to resume the Motor Vehicles Agreement (BBIN MVA) and transshipment privileges for neighboring trades. It can highlight under BIMSTEC that landlocked partners (Nepal, Bhutan) and other members rely on Bangladesh as a regional hub. For example, Bangladesh might offer technical support to Bhutan or Nepal in export logistics, in exchange for better transit arrangements via India. Implementing the recently-agreed BIMSTEC “maritime transport cooperation” would create common shipping lines in the Bay of Bengal, giving alternatives to purely land routes. 

Finally, Bangladesh should keep public confidence high. Government communications should stress the multitude of opportunities outside any one market. Publishing clear data on export performance (for instance, noting that overall exports actually grew 10% in 10 months of FY2024–25) can reassure businesses. Ministries can hold stakeholder forums (inviting BGMEA, BJMA, Chambers of Commerce) to refine strategy. 

Trade doesn’t happen in a vacuum, and Bangladesh must engage all available forums. At the bilateral level, Dhaka’s approach has been cautiously conciliatory – the commerce ministry has lodged complaints via the foreign office, and Bangladesh is asking for high-level talks. This diplomatic channel must remain open. High-level meetings should be sought to accompany commerce talks, making clear that Bangladesh values its relationship but will not accept unilateral disruptions.

India’s recent trade curbs are undeniably a setback for Bangladeshi exporters of jute, textiles and other goods. But this moment also crystallizes a path forward for Bangladesh. It is an opportunity to re-double efforts at market diversification, to invest in industrial upgrading, and to modernize trade logistics. Going ahead, a realistic mix of policy measures (ranging from incentives and infrastructure to export promotion and diplomacy) will be needed. If Bangladesh can address its logistical constraints and innovate in its product lines, it can mitigate the impact of Indian restrictions and even emerge stronger.

Sent-in by: Tanim Jasim

Bio: Tanim Jasim is the Assistant Professor, Department of Bangla, University of Dhaka, Dhaka 1000. 

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